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Investment only annuities is the best way to secure your retirement and invest for retirement for the fact that it pays fixed sum of money for a longer time period. You may supplement the retirement income with investment only annuities. Annuities provide you money for the rest of your life. But, it is expensive and not suitable for those who can’t afford much. It’s a kind of insurance plan which bring about income after a period of time. Simply put, you invest in annuity and get income in return.
Wondering why to invest in annuities? The answer is simple. It is the best way to expand your tax-deferred earning.
Choose a retirement planner
While annuities generate income, the process is quite complex. To establish the annuity plan may seem perplexing and confusing. Therefore, look for a financial planner or a retirement planner. Work out things with him and get good results. He will make you aware of the types of annuities available and what would suit you. Each kind of annuity plan has a different tax consequence and charges for early withdrawal.
The kinds of annuities
- The first kind of annuity is the deferred annuity where the payment is deferred and carried forward to the later date. Simply you contribute funds and then receive payments in annuity
- In the immediate payment annuity, you purchase the plan with lump sum cash and the plan begins
When it comes to annuity plan, it may be either variable or fixed. The choice is yours. As the name suggests, in the fixed annuity the rate of interest is fixed and vice versa. You may buy a plan for 10 years, 20 years, and so on depending on your age.
Which is better?
If you want financial security, you should choose fixed annuity and be content with fixed rate. While in variable annuity, the income is based on your investment performance. The rate keeps on fluctuating on that parameter. The beneficiary can get the income from the plan but still variables exist as per the designation of beneficiary. The beneficiary can be spouse, non-spouse or married couple owning the annuity jointly.
What about the payment options?
There are a variety of payment options. They are single premium deferred annuity, single premium immediate annuity, variable deferred and flexible deferred fixed annuity. However, you have to be aware of hidden fees concerning annuity investing. So, talk to the professionals and also weigh your risk.
