Have you Heard About Retirement Planning with Annuities?

It is hard to walk into a bank or speak with an insurance agent without hearing about retirement annuities. There is a lot of interest because these insurance company products have some of the features of inusrance and savings or investments.  Because of this, they may be a safe and sound way for you to plan for your future goals.

Although they have other uses, one basic goal that many purchasers have is retirement planning. Keep in mind that your retirement may be coming up next month, you may already be retired, or you may be planning for a goal that is many years down the road. Your own choices will depend upon your individual situation.

Immediate Annuities For Income Now

If you have a lump sum of money that you collected from your job, or have just saved over a period of years, you may be interested in having a way for that money to produce a guaranteed income for you. Of course, your options will be affected by the amount of money you have and the amount of income you want to collect. With an immediate income product, you can deposit your money this month and start collecting your income next month!

You can choose a variety of payout options. Some popular examples may be 10 years, lifetime, or joint survivor (the surviving spouse collects). Again, your choice will depend upon your financial goals and the amount of money you have to deposit.

You may choose 10 years if you have another investment that will mature down the road, or if you just want income now so you can start that retirement business you always dreamed of.

You may choose a lifetime payout if you just want to insure that you will have an income for your retirement years.

Deferred Annuities For Income Later

If you want to start building a lump sum for retirement, you should look into deferred products. You may invest some money now, and then keep making contributions periodically, say every month or every year, so that your cash account will grow over time.

The money will grow without being taxed. If you used pre-tax dollars to invest, you will be taxed when you withdraw it. If you already paid taxes on the money, you will not be taxed later. This can be a good way to get the maximum mileage out of your investment money.

How Does The Cash Account Grow?

You may by an annuity with a fixed interest rate. Or you may decide to choose one of the popular indexed annuities that is tied to a major market index.

How is Risk Eliminated?

A fixed annuity, that is tied to a market index, should come with a guarantee that you will never lose money too. In up years, your gain may be somewhat less than the market's growth, but in down years, your gain should be fixed to 2 or 3 percent growth. The potential of gain, while still eliminating the risk of loss, is one reason that annuities are popular ways to plan for retirement.