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The Pros of Fixed Annuity on Your Retirement

Getting yourself a fixed annuity is a wise investment because it offers a wide range of benefits that may secure you a comfortable life after retirement.

1. Tax Deferral

One of the chief advantages of the fixed annuity is tax deferral. The client’s investment is exempted of any tax while it is still accumulating. Taxes are charged only upon the distribution of corresponding annuity income to the company’s clients. This means that your money may grow faster because of tax deferral.

2. Tax Reduction

Your annuity fund is not subject to taxation. By saving your taxable income into your annuity, you can reduce the taxes on your Social Security benefits. When invested in the annuity, the once taxable income becomes non-taxable.

3.  Contract Flexibility

Fixed annuities are flexible because certain types of annuities can be transformed into other types of annuities. For example, deferred fixed annuities can be transformed into life annuities that assure you of a fixed monthly income all throughout your life. When necessary, the annuity owners can also change their payment structures to fit their current needs and wishes. They can review their investment and append their contracts with additional safety features that will secure not just a fixed income for themselves, but also for their loved ones that they will leave behind upon their death.

4. Stability of Annuity Income

The principal, or the original amount of your investment in annuity, is protected. A lot of annuity owners consider this feature the most important because it guarantees that the money they have invested will not vanish very easily. Unlike other investments that are dependent on the present economy, it has a fixed interest rate. It is not affected by market downturns, economic crises, or periods of recession. Thus, even if the economic activity is reduced or even if the company’s investments in other ventures are unsuccessful, you will still receive the same rate of income because it is already fixed.

5. High Interest Rates

Compared to other investments and annuities, it generally offers a higher interest rate. The interest rate in fixed annuities usually falls in the 1% to 4% range.  Compared with the interest rate in money market accounts, this range of interest rate is way higher. Thus, it may give you a higher fixed monthly income than other ventures will.

6.  Easy Access

In fixed annuities, most companies allow you to withdraw a portion (usually 10% every year) of your account value with a withdrawal charge. When the withdrawal charge period expires, you can access your money and withdraw from your account at any time without withdrawal charges.

6. Probate Free Transfer

When the owner of the annuity dies, the full account value of annuity will be paid directly to the beneficiaries you have specified in your contract. Unlike other insurance-related assets and investments, it is not subject to probate. This allows your loved ones to save time and money. Aside from that, it also prevents them from undergoing through a stressful and lengthy process before they can get hold of the money that you yourself had invested for your family.

These chief advantages of the fixed annuity provides assurance to annuity owners that they may be able to live a comfortable life even after retirement. The contract is flexible and can be modified to fit the owner’s needs and wishes. Moreover, it may give them peace of mind because they have a fixed income that cannot be affected by sudden market downturns.

The bottom line? Fixed annuities are a dependable and stable investment that will high likely give you a steady source of income from the day of your retirement to the day you breathe your last breath.

Do you want to guarantee a reliable and stable income your you and your loved ones? Start now! Enter your zip at the top of the page and then answer some basic questions to find out your highest eligible rate.