Considering An Annuity?
An annuity is a type of insurance or investment in which you, the investor, make premium payments and later receive a series of annual payments after retirement. Deposited funds grow tax-deferred, except if it is an immediate annuity. The income paid out by an annuity can help to supplement an overall retirement strategy. Especially if you’re interested in receiving a consistent income after you’ve stopped working.
Annuity income can be dispersed monthly, quarterly, annually or as a lump sum, either for life or for a predetermined number of years. The length of your payment period, whether you choose a fixed or variable annuity, and other components help to determine the amount of your annuity payments.
Immediate vs. Deferred Annuities
There are two types of annuity insurance – deferred and immediate.
In a deferred annuity, you money is invested and grows until you decide to take withdrawals, which usually happens during retirement. In an immediate annuity, you can begin receiving withdrawals soon after you make an initial investment. In addition, you can convert a deferred annuity into an immediate annuity when you want to start receiving withdrawals.
Fixed vs. Variable Annuities
The sums of fixed and variable annuities rely on market performance, body of investments or both.
Fixed annuities pay guaranteed rates of interest, which are popular among retirees who want a predictable income during retirement. Deferred annuities garner regular interest rates, while immediate annuities make fixed payments determined by age and the size of the investment during retirement.
Variable annuities pay income based on how your body of investments performs overall. For that reason, these annuities are not guaranteed.
Like many other retirement investment options, funds that you invest in an annuity grow tax-deferred. Upon withdrawal, the money that you earned on that investment is taxed at your income tax rate.
For current rates, contact our office.