What is an annuity and what are the benefits? There are many different forms of annuities that come in two separate packages called deferred and immediate. A deferred annuity means the money is invested for a period of time until it is withdrawn (annuitized). This option is popular when saving for retirement. An immediate annuity earns and pays out soon after the initial investment. This second option is often used for those who are already retired. Annuities have multiple benefits and can be personally tailored to fit specific needs. So, what are the specific benefits?
Benefit #1: saving for retirement
If savings have already reached as much as possible in a 401k or IRA, a tax-deferred annuity would boost retirement savings. Like any tax-deferred investment, earnings compound over time, providing growth opportunities that taxable accounts lack. Deferred annuities have no IRS contribution limits. This means people can invest as much as they want for retirement. Annuities are also a great way to create a guaranteed stream of income. Depending on how annuities are funded, they may not have required minimum distributions.
Benefit # 2: About to retire
Some deferred annuities may be appropriate for investors who are 5 to 10 years away from retirement because they may offer guaranteed income for life or for a set period of time. Because they provide reliable, guaranteed, income these annuities may enable investors who hold them to take a more aggressive approach with other assets in their portfolios.
Benefit #3: Already retired
Income annuities may be appropriate for investors within one year of retirement because they offer guaranteed income for life or a set period of time. Because they provide reliable, guaranteed income, these annuities may enable investors who hold them to take a more aggressive approach with other assets in their portfolios. One of the few downsides is the limited, or no, access to the assets invested in an immediate annuity.
Why wait a moment longer to secure your retirement income with an annuity? Act now! Reach out to one of our life and financial experts today! Choosing the best options isn’t always easy. There are many factors to consider and our experts can help you make the right choices.
Did you know life insurance can be used to save for retirement and to help pay off debt?
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