Guaranteed retirement income looks like a wonderful thing to have if you need regular monthly payments for the money that you have built up as a nest egg for the future years of the retirement. The guaranteed income will mean that when you retire you can opt for the monthly payments to be given to you and you can potentially enjoy a lot of leeway in terms of the money that you do not have to mange.

So what are the guaranteed retirement income policies? Well essentially these are the annuities but in a variety of styles and designs. There is the immediate annuity which you can take and in this the you handover then entire principal that you have and in return you are guaranteed a monthly income till you die. Of course the monthly income is subject to how well the company is doing and that will mean that in case the insurance company itself goes insolvent then you are in serious danger of losing your entire investment in one shot.

Now whether these are better than the CD is debatable. In CD you can easily have your principal back and also you can make changes but in these annuities there is nothing you can do and you will never get your principal back. The main thing here is that you are hinging on the life expectancy as that will tell you as to how much of the money you have earned back so to speak. The biggest benefit is that returns based on the average assumption of the life expectancy are much more than a certificate of deposit.

There are other flavors too which are the variable annuities as well as the deferred annuities and in all these cases you can take an annuity right now and then when you have retired the payments can start. The benefit is that since you have the money right now you will be able to pay a lot of the premium which you would have need to pay to insurance company who is issuing the annuity.

How do the variable annuities make money is that they invest in the mutual funds and that will mean that is you invest in the variable annuities there is a potential that you may not be able to make good monthly payments as the monthly payment are based on the performance of the underlying mutual finds where the annuities are investing like Vanguard or TIAA-Cref. That said if you want to avoid the risk then here is what you should do. Have the asset allocation strategy marked out and invest only 30 to 40 of your retirement income in these annuities and the rest in the money market mutual fund or even the usual stock and the bonds.

The best way to make sure that you have guaranteed lifetime retirement income is to save as much as you want and that will keep in good stead when you are retire.