Are you nearing retirement? Have you been wondering what your options are? You might not know it, but there are many more options to your retirement than your retirement savings. Sure, this investment may have done you well for the past few years, but if you don’t want to constantly make withdrawals each month, you might be more interested in a plan that pays you automatically each month, just like the days when you were receiving a regular paycheck.

The Annuity

A regular annuity is typically set up when an investor has a lump sum of money, but would rather earn a small portion on those dollars with interest, as well as receive a monthly payment on a consistent basis. Normally, there are terms in place for each type of annuity (they can all be slightly different, depending on the institution offering the annuity) that will tell you how much you will receive each month, and how long your annuity payments will last. Depending on the amount you deposit and the amount you would like to receive each month, your monthly payments will change accordingly. Most often though, the common payback period is 20 years (based on my experience with various annuities).

The Enhanced Annuity

So let’s say your annuity is set to last for 20 years. It begins after your retirement date (typically), so you’re probably about 65 years old. What if you have a medical condition and you’re only expected to live for five more years? Then what good is a 20 year annuity? It would be foolish to invest your money this way! Why wouldn’t you instead look for a more short term annuity that would pay back a larger amount of money each month with a lower period for payback, say five years instead of 20?

Believe it or not, there is such a thing. It’s called an enhanced annuity. If you have high blood pressure, high cholesterol, type 2 diabetes, are underweight, overweight, or currently smoke, you may be eligible to reduce the term on your annuity and receive a higher income each month. If your condition is even more severe than these, then you might be eligible for enhanced annuities, which would offer an even higher level of income.

When you start shopping around for an annuity, you’ll most likely have to fill out some forms with medical information. Be sure to answer these questions honestly and accurately. If you do not, then you might only qualify for a longer term annuity, which could just go to waste if your life expectancy is much less.

I understand that you might be embarrassed to state various conditions on those forms, and it might be upsetting to think that you only have a few years to live on this earth, but think about it. If you’re in this situation, wouldn’t you much rather receive a larger sum of money each month and enjoy your life while you’re here on earth? I would!

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