Creating a personal pension plan usually means making an investment that will provide fixed income payments after retirement. A common way to do this involves the creation of an annuity, which is a type of insurance product. You can contribute a lump sum into an annuity and arrange to receive a monthly income from it for the duration of your lifetime after retirement or for the number of years you specify. You can even name a beneficiary to receive your payments in the event that you die before the payouts have ended.
To create a personal pension plan, you’ll have to look for an investment that will provide you with income when you retire. For example, you might look for an investment that will provide you with $6,000 US Dollars (USD) annual income after retirement. A popular choice is the purchase of an annuity to create your personal pension plan. An annuity is a type of insurance product in which you invest a sum of money and receive future income based on the amount of your investment and the details of your insurance contract.
When your goal is the creation of a personal pension plan, one option is to buy a type of annuity that is referred to as a lifetime immediate annuity. This involves deciding how much money you can afford to invest and entering into a contract with a company that handles annuities. Usually, this is an insurance company or an investment firm. The company takes charge of your money, and in return, you get income to carry you through your retirement years. As with a pension you would receive from an employer, your annuity will provide a monthly payment of a fixed amount of income.
With a lifetime immediate annuity used as a personal pension plan, the retirement income you receive will depend on a number of factors. For example, some of the factors that influence the size of your retirement income check include the total amount of your investment, interest rates, and the payment options you select. Your age can also influence the size of the check you receive during retirement. The jurisdiction in which you live may play a role as well. Most people receive their income payouts monthly after retirement, but you can also request quarterly or annual payments instead.
As you create a personal pension plan with an annuity, you will also have some choices to make regarding the length of time you will receive income payments. In most cases, you can choose to have your payments continue for as long as you live after retiring. You also have the choice of limiting income payments to a set number of years, however. In the event that you die before the agreed-upon annuity period has passed, the person you named as a beneficiary will receive the payments that are leftover. For example, you might wish to name your spouse as your beneficiary so that he or she will have this income to rely upon after your death.
