5) Purchase an Annuity
This option is not for everyone. If you’ve got limited retirement savings to begin with then it’s probably not a good idea to tie up even more of your money elsewhere. If you’ve got a comfortable nest egg and are confident that you won’t run out of money in retirement, then an annuity will not necessarily help you either. Annuities make more sense for people who fall somewhere in the middle. How does it work? Annuities can be purchased for a certain upfront cost and will then guarantee to pay a certain amount every year for life. You’ll also earn interest on the lump sum you paid which is added to account. This is the best option for those who want a reliable income stream in retirement. It’s kind of like having a second pension. The downside is you can’t back out later if you change your mind.
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