The idea of annuities is that a contract for life annuity is concluded with an insurance company at working age. “Lifetime” means that until you reach the age of 100, you will be regularly paid certain amounts from what you have accumulated with the help of the insurance company, including additional income.
Savings for old age can be divided into two stages: active accumulation of funds and use of equity capital. If a person has started saving too late, however, he will have to work longer.
The size of future payments is influenced by:
- amount of paid contributions;
- client's age at the start of payments;
- rate of return
The funds, after accumulating under the contract with insurance company, can be used for annuity payments, i.e. regular annuity.
Source: https://www.moneyweb.co.za/mymoney/retirement/the-importance-of-planning-for-retirement/
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