Annuities Are A Good Retirement Investment
Fixed annuities have gained in popularity as a retirement planning alternative. You may want to think about that.
Annuities offer many advantages that retirement plans do not. You may need to rely upon some of those advantages when you are ready to retire. If you never thought about supplementing your retirement with an annuity, you may want to reconsider. Here’s what a fixed annuity can do for you.
#1 – Protect Your Assets
Protecting your retirement income against market losses will most likely be your most important objective during your retirement years. Market swings can drop the value of your retirement investments very quickly. Sometimes the value of your accounts drop so low that they may never hit an upswing.
Watching the investment money you rely upon to support yourself during retirement fluctuate in value is hard to take. Annuities can help you protect your retirement investments from market swings.
#2 – Create A Stream Of Income For Life
You can create a guaranteed stream of retirement income for the rest of your life with an annuity. There are different riders and income options available; each one can help you meet different long term retirement needs.
Common Income Options
- Single Life
- Single Life with Term Certain
- Joint Survivor
Each income option has a different cost basis. Your personal financial needs will determine which option works best for you.
- Single Life: payments are guaranteed for the remainder of your life.
- Single Life with Term Certain: payments are guaranteed for a certain period of time.
- Joint Survivor: the payout is guaranteed until the death of the last survivor.
#3 – Inheritance Issues
If you want to leave inheritance money for your loved ones annuities can help.
The guaranteed death benefits built into annuities allow you to pass on your wealth. Do keep in mind that any withdrawals made by you will reduce the death benefit amount left for your heirs.
#4 – Roll It
Annuities help you protect your retirement plan rollover money.When you leave a job you can roll over money from that employer’s retirement plan into an annuity.
Just keep in mind that if you are under age 59 1/2 you cannot make a withdrawal from your annuity without being subject to income taxes and a 10% penalty imposed by the IRS. After age 59 1/2 you are just responsible for income taxes, you are not hit with that 10% penalty.
What Works For You?
When you start an annuity you have the option of making a lump sum payment or monthly payments.
Some investors roll over a portion of their retirement plan account from work into an annuity when they retire. Other investors prefer to make monthly payments into an annuity during their working years. Everyone has different financial resources, you need to decide which option works best for you.