After many long years of working, it is very important that you plan for your retirement by making the right financial investments. There are many retirement options available and they all have their advantages and disadvantages. There are a number of factors to be considered in choosing the retirement plan that best suits you, including your reasons for seeking an investment plan, the kind of retirement plans available, choosing the right insurer, determining the best time to invest, balancing the flexibility of the contract with interest and so on. The length of the guarantee period, the provisions for illness and disability in the contract agreement, and the surrender charges are also factors to be considered. Before we go further, let us enumerate the kind of retirement options available.
First, we have the Individual retirement plans or IRA. As the name implies, these are retirement plans that are started by individuals so as to help them prepare for retirement. Under this, we have the traditional IRA and the Roth IRA. Monies deposited under the traditional IRA plan cannot be withdrawn until the annuitant attains the age of 59½ years. Making withdrawals before this time will attract a charge or penalty. The Roth IRA is similar to the traditional IRA but in this plan; the interest earned is not taxable and making withdrawals before the stipulated time does not attract a penalty.
Secondly, we have the employer sponsored plans. Under this we have the Defined Benefit plans which allow for equal amounts to be paid out for a specified number of months during retirement, the Defined Contribution plan in which the employee and employer both make a specific contribution each month and the money is invested in either mutual funds or stocks, the 401(k) Plan in which employers and employees make specified payments but it is tax-deferred until it is due for withdrawal after the investor has reached 59 ½ years, and the Profit Sharing Plan in which all the contributions are made by the employer and they decide how the profit will be shared between them and their employees.
Fixed annuities for retirement are one of the great options because they create a steady income for retirees over long periods of time. With this type of annuities, the investor is rest assured that the ups and downs of the market will not affect his investment and the rate of return is guaranteed. The tax- free nature of a fixed annuity plan affects an investor’s future payout positively. Investments in fixed annuities have proven to be beneficial in the long term for those who are nearing retirement or have retired.
A prospective investor in fixed annuities for retirement purposes should make sure that he invests with a sound insurance company. It is important to read the prospectus of the company and study their history. Also check the company’s rating. A rating of A++ or A+ is good enough. Make sure you are well informed of any fees or charges before making an investment decision. Seeking the help of a professional insurer and relying on one’s good judgment will go a long way in helping the retiree make the best retirement plan decision as well.
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