Should You Buy a Retirement Annuity?
Are you wondering if a retirement annuity is a good investment to help fund your golden years? The flexibility of different payment and payout structures, as well as the guaranteed income you can receive upon completion of your payments to an annuity makes these investments a worthy inclusion in any investment portfolio. The older investor with lower risk tolerance can be able to strengthen his or her financial plans for retirement, especially if the annuity is used along with various types of growth-oriented and guaranteed-income investments in a diversified investment portfolio. Here is a short guide to some of the benefits a retirement annuity comes with:
The Pros
One of the main benefits to buying into annuities is the tax benefits these investments have. The payments you make to an insurance provider prior to receiving annuity payouts have the ability to grow without being subject to tax, up to the point that you start taking distributions from it.
Only the gains made from the annuity are taxed, which can be an advantage to the retiree who is typically part of a lower income tax bracket once he or she is retired. This means that once you start taking payments, you could pay lower taxes on them. There are no limits to the money you can pay into an annuity, unlike 401Ks and IRAs, also resulting in flexibility in terms of what you can receive and for how long you take these payments.
All in all, the primary reason why annuities are popular is the guaranteed and stable income investors receive from them. Bleak economic conditions may have made a lot of other investments even riskier, but the sure returns and rates of payment entice investors whose financial stability has been dragged down by investment losses.
Some Guidelines
To make the most out of your annuity and boost its benefits to the strength of your retirement finances, you will need to make sure that you will be able to spare the annuity money for the time being and only take distributions after the set period ends, or you may have to pay extra for early withdrawal charges. Also, check to see if the guaranteed return rates an annuity promises can make up for the investment fees it comes with; otherwise, your effort may not be worth it. To see what annuities are right for you and your financial objectives, capabilities, and personal situation, contact a reputable retirement annuity provider.
About the Author:
Katherine Smith is an author who specializes in financial topics concerning seniors.Puritan Financial Group provides seniors with retirement annuity information that can help them build bigger and stronger nest eggs. For more information on how Puritan Financial Group can help you, please visit our website at http://www.puritanlife.com/products/annuities.
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