The prospect of retirement can be daunting, especially when it comes to managing finances. Often, people ask themselves the question, “how long will my money last?” But this is not the right question to ask when it comes to securing your future. The real question should be, “how can I guarantee a steady stream of income to last the entirety of my retirement?”
And the answer is annuities! Here are the benefits of annuities and how they can provide guaranteed income for your retirement.
WHAT’S AN ANNUITY?
An annuity is a financial product that guarantees a steady stream of income for a predetermined period, usually for the rest of your life. There are two main types of annuities – fixed and variable. Fixed annuities offer a fixed interest rate for a set period, while variable annuities offer an opportunity to invest in stocks, bonds and mutual funds. Both types of annuities offer guaranteed income for retirement while reducing the uncertainty and volatility that come with other forms of investments. Of course there are more, such as, single life annuities and joint and survivor annuities too. But the key is to start early!
BENEFITS
One of the main benefits of annuities is they offer a level of security, especially during times of economic uncertainty. The guaranteed income from an annuity can provide you with peace of mind, knowing you will have a steady stream of income for the rest of your life. In fact, many retirees choose annuities precisely because they offer guaranteed returns. Moreover, annuities can be structured to provide income during the early years of retirement, when you are physically and mentally active, and a strategy that provides increased income later when health care costs are expected to rise.
Another benefit of annuities is tax-deferral. Annuities allowed to grow with deferred taxes mean that your earnings won’t be taxed until they are withdrawn. As such, you are able to earn interest on your annuity investments without the burden of the tax liability. Furthermore, unlike traditional qualified retirement accounts, annuity plans do not require you to remove a percentage of money annually.
In addition to the tax-deferral, annuities offer beneficiaries tax-free death benefits. This feature provides security to policyholders and their loved ones. In the event of an early death, the policy’s beneficiaries receive the value of the policy tax-free.
CUSTOMIZATION
Finally, annuities offer flexibility and customization options. Annuity providers offer numerous options, including term, rider options, interest rates, caps, and floors. Retirement account owners can establish a personalized system according to their financial goals, age, risk tolerance, income needs, and life expectancy.
CONCLUSION
Planning for retirement can be challenging. With an annuity, you can greatly increase the likelihood of having the funds you need to live a comfortable and stress-free life. By focusing on guaranteed income rather than just the amount of money you have saved, you can secure your future and have peace of mind knowing that you will have a lifetime income stream. The benefits of annuities include security, tax-deferral, tax-free benefits to beneficiaries, and customization options. Ultimately, an annuity is an excellent vehicle to consider when planning for a financially secure retirement.
Speak with an insurance advisor today at 732-705-1332 to see if an annuity is right for you!
