What are your financial plans for retirement? Are you going to have enough money to last you until the day you die? While some people are set for the rest of their life, others are worried about what the future holds. With so many investment vehicles to choose from, finding one that suits you well is possible.
One investment option to consider is an annuity. Even though this type of investment is seen in a “bad light” by some, there are definite benefits.
Tax deferred growth. With an annuity, the amount of money that you earn is tax free until it is withdrawn. Although you will pay taxes eventually, at the very least you get to control when this happens. There are not too many investments that offer this benefit.
- Guaranteed income until the day you die. Even if you outlive the principal amount of your annuity, you can continue to receive income on a predetermined schedule. For many, this is the number one benefit.
Note: you have to select the right type of payment option for this to happen.
More than one payment option. Just because most people setup their annuity to payout a certain amount on a regular basis does not mean that you have to follow suit. When you are finally ready to receive payments you have several options including: lump sum distribution, systematic distributions (money sent regularly), periodic distributions (get money only when you need it), or guaranteed payments for life.
Simple startup. Many people never begin to invest their money wisely because they do not know the first thing about getting started. With an annuity you do not have to worry about this. Once you find a company that offers annuities, all you have to do (for the most part) is fill out an application and send your money. But of course, if you have any questions you can ask your representative to clear the air.
- Ideal for those on a fixed income. Extra money every month can come in handy for people in this position.
One final detail to consider is that there are many different annuity products available. The most popular include: variable annuities, fixed annuities, immediate annuities, and equity indexed annuities.
Before you do anything, research both the pros and cons of annuities. While the benefits above are important, there are downsides to consider. Once you are knowledgeable on how annuities work and what they can do to better your finances in your retirement years, making a confident decision is a piece of cake.