When someone gets his first job, it is always a great feeling. Actually, there are people who will be carried away by this feeling and forget that at some point they will retire. When this reality dawns on them, they could be filled with fear and even wish that they could work forever. However, that is not possible.
Luckily, there are various ways of securing the days after retirement. One of them is to invest in a fixed annuity. These are available in two options. One, there is the deferred option. In this case, you will deposit money into your insurance account. Then this money will earn interest without any tax charges. Therefore, it will grow at almost exponential rates. However, once you make the deposit you will only be able to access the money after your retirement. Otherwise, prior withdrawals will require that you pay some huge penalties. It is also necessary to note that this is a favorable retirement scheme for young people.
The second fixed annuity option works best for people who are just about to retire. It is the immediate annuities. In this case, you will make a lump sum deposit which could be from your retirement benefits. The advantage with this venture is that you may not have to wait for a certain number of years for you to start receiving your periodic payments. However, irrespective of the option that you use, you have an opportunity of having a regular source of income just as if you are still employed. Moreover, you will receive these payments for the rest of your life.
Irrespective of the option or insuring firm that you will use, some features identify the fixed type of annuities. Here are these features.
a) Single premium – These investments require that you deposit your money only as stated in the contract. Once this is done, you cannot add any deposits. Your only chance to invest more money would be to buy a new annuity contract.
b) Guarantee rate – With these investments, you will always have the assurance of having a certain set interest rate for a given number of years.
c) A minimum risk level – Financial analysts rate these annuities as few of the investments that do not stand any chance of losses, despite poor market performance. The only risk would be that of your insurer becoming insolvent. Therefore, always research to ensure that this firm is unlikely to get into such a mess.
d) Retirement income – Once you stop working, you would like to continue having a comfortable life. This requires a regular source of income. Having some fixed annuity investment will provide you with this security.
e) Returns of between 3 and 10% – These types of annuities will earn more money for you that you are likely to get from interest rates in a savings account. This advantage basically comes from the absence of taxes on the interest money.
f) A source of income for all your days – When you retire, there is a chance that your investment will collapse and dive into some abject poverty. However, when you invest in the fixed option of annuities, you can consider receiving regular monthly payments for a lifetime. In this case, you may not need to worry about losing your investment.
g) Absence of management stress – If you start up a business, you will definitely need to oversee its running. This can cause you plenty of headaches. However, with these annuities you may not need to worry about anything after depositing your investment principal.
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