Advantages of Annuities for Retirement Planning

We all have a variety of retirement savings vehicles, and these include bank savings or CDs, stock markets investments, and annuities. While banks are very safe, they tend to pay out lower interest rates.

Advantages of Annuities

Below I have taken the liberty in listing some great advantages of Annuities. Read through them before considering this type of insurance.

• Tax Deferral of Investment Earnings - without a federally imposed maximum contribution. Other retirement plans, like IRAs and 401Ks offer tax deferred growth, but the government sets strict maximum yearly contributions.
• Contribution Choices – You have the flexibility to choose between making a lump sum payment or smaller contributions over a period of years.
• Equity Indexed Annuities - make gains according to standard market index like the S&P 500, but many plans have a guaranteed return so you will never have a year where you lose your principal or the gains you made in previous years.
• Debt Protection – Laws vary by state, but in general, your retirement money will be protected in case of a bankruptcy or debt. You do need to consult with a qualified tax professional in your own state for more specifics.
• The potential for lifetime income from one investment - You can purchase a an annuity which will guarantee an income for a specific period of time, which can include a lifetime payment. Of course, the amount of that payment will vary by the amount of money you have to invest. Also not that even if you purchase a lifetime benefit, you should also make sure it has a guaranteed minimum payout. This will protect your heirs in case you pass away shortly after you purchase the annuity.
• Exchange annuities with no tax consequences - You can trade one type of annuity for another without having to pay any taxes or IRS penalties.

Remember that annuities vary, and there are dozens of different types on the market. Make sure you understand how your money will be handled under a variety of circumstances, including market downturns, your death, and debt problems. Also be sure and find out if you can withdraw your money without a penalty in the case of a serious illness or other hardship. Many annuities do allow this, so they can also be a good way to plan for long term care expenses without buying a long term care insurance policy.

We make it easy to compare annuity plans online. Find annuities and annuity advisors in your own local area with our safe and free annuity quote forms.