Question

What are the advantages associated with taking the pension payouts in the from of an annuity what are the disadvantages

Answer 1

There are various advantages of pension payouts in the form of annuity. After the retirement the person does not have to worry about the income as every month a fixed amount is given during the lifetime. This helps in ensuring that everyday life of a retired person is smooth and he or she can survive respectfully. It also ensures that the entire retirement corpus is not spent completely and is given to the person in parts.

A major disadvantage of the same is that it does not give provision for emergency as entire corpus is not given in one go and hence a person who is retired has to manage himself. Also if the person die then he or she gets deprived of his or her accumulated income that was saved for retirement.