Annuity plans, also known as retirement plans, enable one to receive payments regularly after paying a lump sum amount. That payment made is further used by the company to generate income and pay the customer with the generated returns.

Safe Investment Option: Annuity plans let you plan for the future and is one of the safest investment tools because your payout is guaranteed. It isn’t like mutual funds or other investment options which are market-linked i.e. it doesn’t have the volatility in returns like other products.

Financial Security: Acts as a retirement plan that guarantees offering a payout during post-retirement phase of your life and lets you lead a comfortable and relaxed life in that period.

Flexibility in Payout: You have the flexibility to choose from an array of annuity options depending on what suits your requirements the most.

Under this, the money is invested for some period before payments are made. It's recommended for individuals who are working and still have some more years before retirement. It may also come with a “life cover”, which implies that, in case of the demise of the insured, the nominee is paid a lump sum amount.

Immediate Annuity: In an immediate annuity, you start receiving payments as soon as the initial investment is made. If you are approaching retirement age, then this is the type of annuity to opt for. So, deferred annuity accumulates money while immediate annuity pays money.

There is no limit on the amount that you need to invest in retirement plans. Whether you choose a deferred or an immediate annuity, there are few things you need to consider:

·         Your actual financial needs

·         Your long-term financial goals

·         Your current savings/investment portfolio

·         The impact of inflation.

For instance - If you are retiring at the age of 60, even before you zero down on your annuity pension plan, you will have to consider the amount required for your monthly expenses, the yearly inflation rate at which this expense will grow, emergency costs like payments toward health issues etc., to calculate the retirement savings you will require.