Let’s face it - everyone dreads thinking about retirement. Not everyone is able to put away enough each month. Even people with a retirement strategy in place can feel like they’re at the mercy of an ever changing financial market. A lot of other people find themselves 5 or 10 years away from retirement, and they realize that they may be in trouble. They don’t have a retirement strategy.
When it comes down to it, trying to figure out interest rates and the best way to save your assets can get overwhelming. Wouldn’t it be simpler to just think about how much money you need each month, and find a way to get that amount of income when you retire?
Enter the annuity policy. An annuity is a contract between you and an insurance company where you pay premium and in return obtain regular disbursements beginning either immediately or at some point in the future.
Here are 6 facts you should know if you’re new to annuities:
1) They’re tax deferred. The premium you pay in an annuity compounds interest, without you having to pay the tax while you hold your annuity. That means every dollar you put in is immediately put to work for you. The best part - there’s no annual limit on how much premium you can pay. No matter how much you put in, it will not be taxed until you surrender or annuitize your annuity. .
2) They’re flexible. Once you’re ready to annuitize or cash out, you can choose monthly, quarterly, or annual payments. Or if your situation changes at any point, you can take the full balance as a lump sum whenever you choose. You can also decide to start withdrawing payments earlier or later than you initially planned. Remember that most annuities have a surrender period for the first 5 to 15 years of ownership. Though you can withdraw before that period, your balance will decrease based on the surrender charge.
3) They can protect you from a fluctuating market. With some annuities, you can lock in an interest rate that will stay fixed. It may not be the best annuity for everyone, but if you’re looking to stand on solid ground during your retirement, it may be the annuity for your needs.
4) They can complement your existing pension plan. If you already have a pension plan, an annuity may be a perfect complement to your existing pension. If you’re unsure whether your current pension plan will help you have a steady income once you retire, an annuity can be a great strategy to create additional income.
5) It’s never too late to start. Even if you don’t have anything saved for your retirement, there may be an annuity that’s right for you. Even if you’re only a few years away from retiring, it’s not too late to secure your future.
6) It’s easy to get started. There are services out there that will take into consideration all of your financial needs, where financial professionals will answer your questions and help find the best annuity for your needs. It’s as easy as filling out a few basic details, and then letting someone else do all of the hard work.
This article is sponsored by Senior Annuity Alert