An income annuity covers various retirement expenses that are not always covered by Social Security or pensions. The customizable contract issued by an insurance company converts an investor’s premiums into a guaranteed, fixed-income stream. It reassures investors of a steady income flow, throughout post-retirement. This retirement plan is only as good as how well one manages the contract. With proper expert guidance, an investor can learn how to reap the benefits of an income annuity.

Learn about the types
One of the easiest ways to benefit from annuities is to learn about the available types. There are various options: immediate, deferred income, indexed, variable, and fixed deferred annuities. Each type might suit different investor profiles. Learning about them in detail will help one make a more informed investment decision in the long run.

Split the money
One can divide their money across various annuity contracts using a bucket strategy to stay on budget. The method allocated for short-term, intermediate, and long-term expenses. For instance, if one has recently retired, one of the contracts can be set up to start immediately, while another can be set up in five years when the spouse plans to retire. A third contract will be initiated in 10 years, when one might expect a higher health care bill. Doing so ensures one receives money for current needs while the deferred annuities keep growing to offer higher payments later.

Transfer wealth
Income annuities let investors transfer wealth to others, such as heirs. Options with death benefits direct any remaining value of the contract to a beneficiary in a lump sum or a series of payments. An individual can also get a joint-life annuity policy, which will be with the spouse or child. One should remember that an inheritance strategy will reduce the monthly income the annuity pays the investor.

Delay taking Social Security Benefits
If one has not started taking their Social Security benefits, one could buy a fixed annuity to cover bills. This helps delay claiming any benefits. For example, while one can start claiming Social Security at 62, the monthly amounts increase each year the individual waits until age 70. This will offer a significant increase in savings and benefits.