Annuities are one of the most important and inevitable and lucrative policies for the well being of the senior citizens of America. However, at some crossroads of life one might need to have their future to be planned in a proper way, especially during and after the retirement phase. A senior citizen, or any citizen of age sixty-five and above, has the full right to utilize his or her insurances, life insurances, liquid assets, pension schemes, financial plans and such other things - including retirement plans. But proper planning is key to the secured future. An annuity is the ideal plan for such phases of life.

The best time to buy an annuity is age 55 or older. An annuity is the ideal life planning tool for a senior citizen that comes up to him or her with all the advantages near the end of his life. It is a retirement planning tool and has two basic phases:

(a) The accumulation phase and

(b) The annuitization phase.

In an accumulation phase, a person invests money in an insurance company, a senior settlement plan or an investment company for a considerable period of time. The amount might vary from one investment company to the other, but it is invested in a lump sum. Eventually with the passage of time it earns a rate of return.

However, in the other phase, namely annuitization phase, the person who had been investing money in the accumulation phase has the right to withdraw payments on a regular basis, whether it is in a monthly or annual basis. The person who buys such an annuity plan to secure their post-retirement phase is called the annuity buyer. This annuity buyer has to pay what are called basis points. These are basically the fees for the annuities. The annuity fees or the basis points show a percentage of ones investment.