retirement fund

Heading for Retirement? Know Why an Annuity is Best for You

What does annuity mean to a retiree?

An annuity is an excellent plan devised to help people to obtain regular payments all through their lives after investing a lump sum amount with a life insurance company. The company selling annuities, in turn, invests the sum and pays back to the investor the returns accrued from the investment.

This is particularly relevant these days as many Americans are enjoying longer lives than ever before, and so their annuities assure them of an income throughout their lives.

A Regular Retirement Income

If a retiring employee does not qualify for a pension, it will leave them wondering if they ever will have sufficient money to retire. Luckily, financial advisers and insurance agents offer annuity that offers Americans with a regular income during the period after retirement. Annuities provide protection and growth of the asset but provide investors with a guaranteed income during their golden years.

Why Annuities?

annuity insurance

Annuities are available in various types and can be intricate financial instruments at times. Still, advisors can sell such products successfully using appropriate tactics. Here are six benefits that annuities can give to people when they are retiring or nearing retirement.

1.Assured Retirement Income

Americans want their monetary assets to last throughout retirement. Investing a part of their savings from retirement in annuities is an excellent way to get a guaranteed income from insurance companies after they retire from work.

2. Superior Investment Returns

Annuities carry enhanced rates of interest as compared to savings accounts and are insured to a maximum amount of $250,000, depending on the company. These companies pay funds straight to the Guaranteed Trust Fund, making it a very safe investment.

3. Just the Right Thing for Retirees

Annuities are just the thing for both retirees and those about to retire. This doesn’t mean that those who are younger cannot take advantage of it. They can enhance their hard-earned retirement funds with a product that comes with many tax advantages. However, those who want to withdraw funds before they are 59 will get penalized, so they must have sufficient funds to live until they retire.

4. Ask Your Financial Consultant

Your financial consultant should have a good knowledge of annuities, since each institution may have different requirements and processes. Your consultant should also have an understanding of your finances, so they should know which investment would work for you.

5. Protection from Market Fluctuations

Retirees and those nearing retirement hate to see their investments slashed due to a downturn in the stock market. But annuities, especially fixed or indexed, can safeguard the investor’s principal, and at the same time guarantee upward growth.

6. Tax Advantages

Money invested in annuities remains untaxed in the accumulation stage. Investors don’t have to pay taxes if they transfer their funds straight to their insurance company, although distributions of any annuity are taxed.

Retirement can be a lovely time, but only if you’ve saved enough and made the proper investments that will assure you of a comfortable future.

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