An annuity is an insurance product that pays out income and can be used as part of your retirement strategy. Annuities are popular because they provide a steady income stream in retirement.
GoldenGuard Financial can help you determine which products best suit your needs.
All annuities, fixed or fixed index, share several common benefits.
Here’s a summary of what annuities can bring to your retirement strategy:
- Ideal for Estate Planning: Proceeds from annuities pass directly to your beneficiaries without the delay, expense, and publicity of probate in most states. If you’ve ever had a loved one’s estate go through this time-consuming legal process, you know just what kind of advantage this is.
- The Power of Tax Deferral: Because you do not pay taxes on earnings every year, your annuity is able to work harder thanks to tax-deferral. You will have to pay taxes on earnings when you withdraw your annuity’s gains, but at least you can decide when that happens.
- No Contribution Limits: Contributions to other retirement savings vehicles, like 401(k)s and Individual Retirement Accounts, are strictly limited. Annuities, however, offer tremendous flexibility. You can contribute as much as you want, up to the limits imposed by the insurer, to take advantage of tax-deferral or variable accounts inside the annuity. Plus, you can add to your annuity contract at any time.
- Flexible Payment Options: When you do decide to begin receiving payments you can typically select from one of the following methods:
-Lump Sum distribution (a one-time payment)
-Periodic distributions (you can take money only when you need it)
-Systematic distributions -Lifetime Income Guarenteed for the rest of your life without having to annuitize.
- Protection against market downturns.
Annuities are designed to be long-term investments and frequently involve substantial charges such as administrative fees, annual contract fees, mortality & risk expense charges and surrender charges. Early withdrawals may impact annuity cash values and death benefits. Taxes are payable upon withdrawal of funds. An additional 10% IRS penalty may apply to withdrawals prior to age 59 ½. Annuities are not guaranteed by FDIC or any other governmental agency and are not deposits or other obligations of, or guaranteed or endorsed by any bank or savings association. With fixed annuities, both the money you invest and the interest paid out are guaranteed by the claims-paying ability of the insurer.