Opening an Annuity at 70

Retirement planning strategies most often change over time, but typically do not end on the day you officially retire. Instead, they shift from a primary focus of "saving enough" to one more focused on management. Reaching the age of 70 most likely means you are at or near this juncture and years of preparation are about to pay off. As you make the transition into retirement and begin to withdraw retirement funds, consider a strategy for managing your money that includes an annuity. Opening an annuity at 70 will supply guaranteed income well into your twilight years.

Considerations

Opening an annuity at 70 can be a good way to manage your money. Making the right decisions at this time will ensure your retirement funds do not deplete long before you pass on. Start by considering where and how much you currently have in savings, your health status, lifestyle and, most importantly, how long you can reasonably expect to live. The Social Security Administration says that on average, surviving to the age of 70 means you will likely live to about the age of 85 if you are a man and to about 86.7 years of age if you are a woman.

Type

Annuities are similar in nature to a life insurance policy with one important difference. Rather than paying out after you die as life insurance does, an annuity pays out during your lifetime. Of the three basic types available – fixed, indexed and variable – a fixed annuity carries the least amount of risk. Because risk is an important consideration at 70 -- you don't want to lose the bulk of your funds if the markets go south -- a fixed annuity could be your best and safest option. With a fixed annuity, you get a specific rate of interest on the money you invest and receive a set monthly income that depends on whether you choose to receive payments for a definite time period or until your lifetime ends.

Frequency

All types of annuities can start paying out immediately. As an alternative, you can invest the money, allow it to grow for a time and start receiving your monthly payout at a future date. Although the choice is always yours, an annuity that begins paying out sooner rather than later is most likely the better choice. If you decide to defer annuity payments, you can choose a shorter time frame, such as five years or less, and begin receiving monthly payments at that time.

Strategy

Strategize to make sure the annuity you open works for you and your financial situation. Understand that, although using your current retirement funds to open an annuity provides guaranteed income, it also means you no longer have funds on hand to withdraw as you see fit. If this does not suit you, consider a strategy in which you leave a portion of your money “as-is” and use the rest to open an annuity. This option allows you to manage a portion of your money while still enjoying the security of guaranteed income.