Understanding annuities for retirement not only from the investment benefits it provides, but also from the tax advantage it offers will get you started on choosing an annuity type that guarantees a happy life when you stop receiving a steady income.
An annuity is basically a contractual agreement between an individual and an insurance company where the individual pays some money to the insurance company with the hope of receiving the amount in form of income in future. We all seek a secure lifestyle especially after retirement and choosing the right type of annuity is a good first step. Depending on the lifestyle you live now and whether you seek a lifetime income or prefer the flexibility of withdrawing your saved amount before the agreed set time, there is an annuity plan to accommodate you. However, let’s explore the advantages.
Tax-deferred growth: Annuities are tax-deferred that is they are not taxed yearly or even for any reason except in the case of a withdrawal before maturity. Even when your investment is fully mature, the tax is extremely favorable because you will be taxed on the gains and not the principal. By the time you are ready to begin enjoying the benefits of your annuity plan, you would be in a lesser tax bracket which means you would be giving less to the government and having more financial gains to enjoy. One of the most interesting things about the annuity is the fact that there is no limit on the amount you can invest which means you can legally avoid tax on a large chunk of money.
Flexibility and adaptability: Some of the popular available annuity types today include Fixed Annuity, Equity-Indexed Annuity, Variable Annuity, Deferred Annuity, Immediate Annuity, Fixed Period Annuity and Lifetime Annuity. These various types of annuities offers you the flexibility of choosing how much money you put into it, the time limit say 16 -18 years when you hope to keep getting income from your annuity and the rate at which you want these incomes. It offers the privilege of choosing when you’d like to be paid, monthly, bi-annually, quarterly, annually or totally putting off receiving any amount from the investment until an appropriate time.
State Regulated: Unlike other investment vehicles which is independent of the state laws and generally guided by market forces, an annuity investment is state regulated. Hence it offers an excellent investment tool that is secure and should be considered by everyone.
Other subtle advantages an annuities for retirement include being passed on to a beneficiary in cases of death, being able to make your money/savings last as long as you live especially with increasing life expectancy or just being able to cash out in an emergency.
Enter your zip code on the top of this page and we will help you to compare annuity plans from multiple providers for FREE to determine your highest eligible rate. It is important to provide accurate questions to these answers as our pool of providers will provide you with different rates depending on your individual situation.