Prosperity Plus » Education http://prosperityplus.co.nz mike king, prosperity, systems, plus, dunedin, otago, financial, planning, insurance, acc, health, planner Thu, 19 Dec 2013 00:24:02 +0000 en-US hourly 1 https://wordpress.org/?v=3.7.28 Explaining annuities http://prosperityplus.co.nz/explaining-annuities/ http://prosperityplus.co.nz/explaining-annuities/#comments Wed, 14 Sep 2011 23:09:28 +0000 http://prosperityplus.co.nz/blog/?p=84 You’ve probably dreamt about what you would do if you won $1 million dollars on Lotto. But what if someone handed you $600,000 and said it had to support you for the next 30 years?

That’s the situation today’s young and middle-aged KiwiSavers will be facing when they retire.

The conundrum about what they should do with the money is sparking renewed debate about annuities – one of the easiest, and most endangered, ways to make sure your money lasts as long as you do.

An annuity is essentially a bet with an insurance company. You hand over a lump sum in return for receiving set monthly payments until you die.

You are betting that great-grandpa’s genes will keep you alive so you can go on collecting the money long after the original lump sum would have run out.

 

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