Annuities
An annuity can be the primary tool in your retirement plan. It can provide you with income for a lifetime. It is a great device to supplement your retirement income - in addition to pensions, Social Security and savings. It can be like getting a paycheck in retirement without working. Annuities are a tax-sheltered vehicle for investments. These investments can include mutual fund type investments as well as fixed interest products. When an investment is bought in the form of an annuity, taxes are deferred until such a time as you start taking money out. Annuities are frequently used for rollovers from 401K plans and other retirement plans.
Why invest in Annuities?
Tax Deferred Compounding
The money you would have paid in taxes in a taxable investment can be used to increase your earnings. The money you contribute earns interest and the interest on the money you contribute earns interest. An annuity gives you compounded, tax-deferred earnings on dividends, interest and gains.
Guaranteed Death Benefit
At the time of death the value of the Annuity will be paid to your beneficiary as a lump sum or as systematic payments. A spouse, if the beneficiary, can take over the Annuity contract and continue to receive the benefits.
Avoid the Probate Process
Your investment advisor can distribute your annuity to your beneficiary and avoid the hassles of estate settlement through the courts.
Safety of Principle
Some Annuity products have Guaranteed Rates of Return like the interest you earn on CD's. With annuities, though, you won't pay taxes each year of accumulation. In some cases there are no penalties for early withdrawal and in many cases you will receive a higher interest rate on your investment.
Guaranteed Income in Retirement
You can not outlive the income provided through annuitization of your investment product.
