Retirement can be a much-needed respite if one plans ahead. With no stable source of income, the retirement period requires regular funds to cover various expenses. Fortunately, there are several ways to get financial support and security during retirement, helping seniors generate income. Annuities are among these financial strategies, offering regular monthly income to seniors to maintain their lifestyle after retirement. So, here are the top annuity plans for seniors and key things to know:

Best annuity plans
Annuities are a type of contract in which investors pay a certain amount to the insurers to receive financial reimbursements. The insurer pays out this reimbursement as a lump sum or in installments. Seniors usually opt for annuities as an income source after they retire. Here are the top 5 annuity plans for seniors:

1. Fixed annuity
A fixed annuity gives investors a specific interest rate over a fixed period. Here, seniors know beforehand how much money they will generate through the investment. So, retirees are assured of a fixed income every month with such annuity plans. Thus, they can be the best annuities for seniors, as they protect against financial instability during inflation and other financial crises. However, as this amount is fixed, it may not always be sufficient during turbulent times or if one needs more money suddenly.

2. Variable annuity
With variable annuities, insurers invest money in mutual funds or other funds that contain different securities. So, the payout may vary based on the performance of this underlying portfolio. If these assets perform well, one receives high yields, but the returns may diminish in the case of a bear market situation. The unpredictability of variable annuities can be beneficial or harmful depending on the market scenario.

3. Fixed indexed annuity
Here, the investment tracks the performance of a specific index, like the S&P 500, which has the stocks of various top companies in the country. But the amount is not invested in the index—it only tracks it. So, investors do not lose the principal amount they invest, and the annuity grows steadily every year. On the flip side, the returns on such investments are often not very high. While one is unlikely to incur a loss, the profits are also limited. This type of plan is a good option for those looking for a fixed, low-risk type of investment.

4. Immediate annuity
Here, the investor starts getting returns soon after paying a lump sum, typically starting from a few days to within a year. Immediate annuities allow investors to build a substantial amount quickly. It is also beneficial for those who begin to invest just before retirement. A major drawback is that one would have to pay a huge lump sum to receive high returns. Also, the retirement annuity rate for seniors depends on the type of immediate annuity one invests in—fixed, variable, or indexed.

5. Deferred annuity
Unlike immediate annuities, the payouts for deferred annuities begin at a certain fixed point in the future. So, those deciding to invest early for long-term returns can benefit from this type of annuity. But if the investor deposits a huge lump sum early on, the amount is locked until the payout period begins. Again, even for this type of annuity, the yields depend on the type of deferred annuity one chooses.

Benefits of annuities
1. Steady source of income
With annuities, seniors can be assured of a steady monthly income after they retire, which can give them adequate financial security even as they enjoy the perks of retirement.

2. Protection from inflation
Most annuity plans—even the variable ones—offer a certain minimum fixed return rate. So, even if the market underperforms, investors continue receiving at least this minimum amount and are protected from inflation and financial crises.

3. Tax-free contributions
In the best senior annuity plans, the money that investors contribute to the annuity is not taxable until one retires. So, if investors leave the money untouched while it is in an annuity, they do not need to pay taxes on capital gains.

4. No contribution limits
There is no limit on the amount that one can invest in an annuity. So seniors can freely add to their contributions, as the yield directly depends on the amount invested.

5. Death benefits
Certain annuities offer death benefits to beneficiaries in the form of lump-sum payouts or a certain denomination of the regular income. Sometimes, one may need to pay an extra amount to avail of death benefits.

Things to consider
To find the top annuity plans for retirees, the following things should be considered: 

Fees and commissions: Some annuities may charge additional fees or commissions, which may be 2% to 3% annually. Sometimes, they may also levy other charges, like administrative fees and surrender charges. If possible, it is best to invest in annuities that do not charge such fees and commissions. But if they do, one should inquire about these overhead charges in advance.

Individual requirements: If one is investing just before retirement, immediate annuities are the best options, as they begin paying out soon after the money is invested. However, deferred annuities work for those who start investing early. Investors should consider these factors before they select an annuity plan.

Expert advice: Sound and timely financial guidance can help identify the right annuity plan. Professionals can recommend the top 10 annuity plans for retirees and help with the process. So, one can reach out to a financial advisor or professional to get started.