Retirement planning often feels uncertain as you attempt to balance income needs with timing. A period certain annuity offers guaranteed income for a fixed term. This type of annuity can work well alongside other annuities, investment accounts, and Social Security. 

Read on to learn more about period certain annuities, including how they can provide a predictable stream of guaranteed retirement income and help reduce financial uncertainty. 

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What is a period certain annuity?

A period certain annuity provides guaranteed income for a set term, typically between five and 20 years. During that time, you receive regular payments regardless of how long you live. If you pass away before the term ends, your designated beneficiary typically continues to receive the payments. 

The shorter the annuitization period, typically the higher the monthly payout. So 5- and 10-year period certain annuities would likely pay more per month than a 20-year option all other factors remaining the same. Retirees can use this to cover early retirement years or to bridge the gap until Social Security payments begin. 

You typically fund these annuities with a lump-sum payment. The insurer calculates your payout based on the principal, interest rate, and term length. Shorter terms tend to lead to higher monthly payments.

Period certain annuities aren’t the same as life annuities, which guarantee lifetime coverage. Instead, they can be designed for short- to medium-term retirement income. 

Gainbridge helps you compare annuity options so you can confidently choose the right annuity for your retirement. Their platform simplifies complex terms and highlights how each product may fit into your financial strategy.  

Pros and cons of period-certain annuities

Period certain annuities can help you secure retirement income, but they may not be the best option for you. 

Pros

These annuities offer several advantages for retirees looking for defined timelines or estate planning goals.

• Higher periodic payments: Period certain annuity payouts can be higher relative to life annuities. 
• Estate planning advantages: If you die before the end of the term, your beneficiary receives the remaining payments. This adds a layer of security to your estate plan. 
• Bridging strategies: These annuities help cover expenses before other sources of retirement income begin. Sources may include Social Security or IRA distributions. 

Cons

Despite their benefits, period certain annuities come with limitations you should consider.

• Risk of outliving payments: Once the term ends, so do your annuity payouts. If you live beyond the fixed period, your guaranteed income stops. You may need other sources of income to maintain your lifestyle.  
• No further income beyond the fixed term: Unlike life annuities, period certain products don’t offer income for life unless combined with another type of annuity.
• Limited flexibility: You usually can’t change the payout schedule or term once the contract begins.  

Gainbridge makes it easy to compare different types of annuities and align them with your retirement goals. 

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Life annuity with period certain

A life annuity with period certain can offer the best of both worlds for retirees who want lifetime income and a guaranteed minimum payout. It helps mitigate the concern of outliving your money and ensures your loved ones receive income if you pass away early. Monthly payouts are typically lower than those of a life annuity, but the reduced income may be worth it for peace of mind. 

Here’s how this hybrid annuity option functions:

• The annuitant receives guaranteed income for life. 
• If you die within a specified period — such as 10 years — your beneficiary receives the remaining annuity payouts until the end of the term. 
• If you live past the agreed-upon term, your insurer provides you with guaranteed retirement income for life and payments stop when you pass away. 

How to integrate a period-certain annuity into your retirement plan

Period certain annuities typically work well as part of a comprehensive retirement income strategy. They can offer flexibility and predictability during key transition periods. Here are two common ways to make the most of these annuities. 

Layering term-certain annuities with other income sources

A period certain annuity can provide guaranteed income without disrupting your portfolio. You can use a 10-year option to cover expenses while waiting for investments to grow. For example, if you retire at 59½ but want to delay IRA distributions, this type of annuity can help bridge that gap. 

Using short-term certain annuities to bridge to Social Security

This strategy can support long-term retirement planning. If you retire at 62 but want to wait until 67 to claim Social Security, a five-year period certain annuity can help. It can provide consistent income while you wait for a higher Social Security payout later. 

Guaranteed income with Gainbridge

A period certain annuity is a powerful way to generate a predictable income stream in retirement. For a fixed term, you receive payouts that are typically higher than lifetime annuities. As part of a strategic investment plan, it can help bridge the gap as you wait for other sources of money to become available. 

Fixed annuities can be another smart approach to stable retirement planning, and Gainbridge offers transparent fixed annuities with no hidden fees. Our platform helps you compare options and calculate payouts based on your selected term. Use the annuity calculator to estimate how your payments vary based on different scenarios. Explore Gainbridge today and start planning to secure your retirement. 

This article is intended for informational purposes only. It is not intended to provide, and should not be interpreted as, individualized investment, legal, or tax advice. For advice concerning your own situation please contact the appropriate professional. The GainbridgeⓇ digital platform provides informational and educational resources intended only for self-directed purposes. Guarantees are backed by the financial strength and claims-paying ability of the issuer.

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