Smart Retirement Planning: Is an Annuity for You?

Smart Retirement Planning: Is an Annuity for You?
  • Opening Intro -

    Annuities are not for everyone, and it's evident of money uninformed investors lose by withdrawing funds too early.


You can live comfortably after retirement by planning your retirement in a calm, smart manner. Many financial planners have tried to force the idea of an annuity into the conscious of ‘safe money,’ but what about the investor who prefers a little risk for higher gains? A little diversity in one’s portfolio can make a difference in how well their retirement earnings accumulate over the next 10-15 years.

Different Tolerant Levels

Wealthier investors have room for risks that could lose money, but majority of today’s workforce is concerned about job security. What do you do when you are not sure if your company is going under? You must choose an investment vehicle that you can contribute to without employment. An array of retirement options lie before you, but how do you make the right choice?

Study the Markets

Pay attention to certain mutual funds, stocks, and insight offered by industry leaders. Then confide in your financial adviser of where an annuity is a solution to such unstable conditions. In most cases, it’s going to be brought to your attention for clarification. The stock marketers drive up and down overnight leaving many investors in a state of panic regarding their investments. To fight this urge to risk sanity over security, financial planners can help you decide between annuities, mutual funds, bonds, or stocks (if you are a bit riskier or wealthier).

Know if it is for You

A few reasons to consider annuities is if you have maxed out your contributions to your 401(k) plan, want guaranteed payments during retirement, unconcerned about income taxing upon withdrawals, and interested in holding a principal for 10-15 years. The majority of annuity holders enjoy tax-sheltered annuities because it keeps their money in a safe place from Uncle Sam. If you want to begin your retirement planning with a bang, it is evident to purchase an annuity suitable for your needs.

Types of Annuities

You have a choice in where and how to use your investment; fixed annuities offer guaranteed payouts of 3% or more while variables are dependent upon the market. Variable annuities offer a unique opportunity to trade out your contract if you are not pleased in the future. The IRS has created a clause, 1035 Exchange, which provides investors an option to switch out their current plan for a new one without taxation. You also have the power to choose your investments in a variable annuity because its combination is an assortment of mutual funds, bonds, and stocks of your choice.

Payout Options

How much are you willing to pay in taxes during retirement? An annuity is taxed by regular income when it is drawn from the contract. The options available for payout are life with a certain annuity, lifetime payment, joint and survivor, and life with period certain. Each option is accessible and explained in the prospectus of your prospective insurance issuer. Learn about the basics of annuities before jumping into an investment opportunity. Your financial adviser will review all of your concerns and provide the right answers to help you. Make sure you are aware of each and every fee associated with this option then prepare for the accumulation of growth.

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Last update on 2020-03-19 / Affiliate links / Images from Amazon Product Advertising API


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