Annuities Are An Important Component
of Any Sound Retirement Strategy
Annuities are an important component of any sound retirement strategy. They offer peace of mind after you are out of the workforce and no longer receiving a steady stream of income. At their core, annuities are a contract between you and an insurance company wherein you give the insurance company a set amount of money that will grow, tax-deferred, until such time that the insurance company begins paying you a set amount of money each month for the rest of your life. This is not the only structure that an annuity can be, but it is one of the most common.
The Different Types of Annuities
Immediate Annuity: Begins monthly payments to you immediately after funding. They can be useful if you have just inherited a sum of money and want to insure against spending it too quickly.
Indexed Annuity: Grows at a percentage tied to a major index (such as the Dow Jones Industrial Average). You share in market gains but there is a floor to prevent you from major losses.
Variable Annuity: Directly invested in mutual funds or similar investments. While potential gains are greater, you risk losing some of your investment should the market take a severe downturn.
Fixed Annuity: Returns a consistent percentage regardless of market conditions. The returns may be lower, but they are guaranteed and tax-deferred.
Tax Deferred Growth
Fixed-Rate Cash Growth
Potential Big Gains/Losses
Potential for Solid Gains Without Losses
Begin Paying Immediately
Guaranteed Life Income
Lump Sum or Installment Payments
Annuities Have an Accumulation Phase and a Distribution Phase
Annuities should not be viewed as financial investments. When you purchase an annuity, you are really purchasing insurance. In this case, you are insuring a desired future outcome of steady, monthly payments to protect you after you are no longer receiving income from your job or after your career is over. The two phases of an annuity contract are Accumulation and Distribution.
Contact the team at InsureSimpli to learn more about annuities and whether or not they might be a good fit for your financial goals. We are here for you!
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Let’s take a minute to talk about the future. You’re nearly 60 years old, you’ve been working for the past 40 years, become a parent, bought a house, and lived a life. Now you are ready to spend the next chapter of that life doing the things you love the most. You are ready to […]