There are several options worth exploring for retirement planning, and investing in annuities is one of those options. Investing in annuities can be a great way to ensure a steady retirement income. What are annuities? And more importantly, why should you care? Annuities can secure your financial security in retirement, but they can be confusing.
This blog post by Family First Life – Strong Tower & Hammer Lane Consultants explains annuities and showcases their advantages. So, read on to learn more about annuities and how they might benefit you.
What Are Annuities?
An annuity is an insurance product. It provides a steady income stream in retirement, which is helpful if you’re worried about outliving your savings.
Types of Annuities
There are two main types of annuities.
Immediate annuities start making payouts as soon as you purchase them, which can be ideal if you’re already retired or nearing retirement and looking for an income right away. They usually require a one-time lump sum contribution.
On the other hand, deferred annuities have a “deferral period” where you usually make regular contributions and money grows tax-deferred. This type can be ideal if you’re still working and want to save for retirement but don’t need the income right away.
Annuity Options: Fixed or Variable?
Both these types of annuities usually offer fixed or variable options.
You know exactly how much income you’ll receive each month with a fixed annuity because payments are based on a fixed interest rate.
With a variable annuity, your monthly payments can go up or down depending on how the underlying investment account performs.
Advantages of Annuities
- Your principal is protected from market losses and inflation.
- Your contributions grow tax-free till it’s time to withdraw.
- You’re guaranteed a retirement income with most annuities, no matter how long you live. They provide peace of mind by helping to ensure that you won’t outlive your retirement savings.
- Annuities can offer tax advantages. They help bring your current tax obligations down by allowing you to defer taxes on your contributions until withdrawal.
- There are no contribution limits with annuities, and you are free to choose the amount you want to contribute.
- Annuities offer flexibility and choices. You can choose the date and amount of receiving your income in retirement. It can be a lump sum, periodic payments, or sometimes a combination of both.
- Annuities also offer certain death benefits. Your beneficiaries will usually receive the death benefit if you die before your annuity is fully paid out.
Annuities are complex products that may not be suitable for everyone. Make sure you understand all the features. You should buy what type of annuity depends on your risk tolerance and goals.
If you’re looking for a secure retirement, annuities should be part of your retirement planning. They offer several benefits that can help you achieve your retirement goals. Do your research and talk to a financial advisor to see if an annuity is right.
Family First Life – Strong Tower & Hammer Lane Consultants has been providing expert advice to the families of Boyd, TX, for several years. Contact us with your questions about annuities, and start your retirement planning today!