Many Americans wonder how to best invest their money for the long-term. Annuity insurance is one option consider, an arrangement in which an investor makes an upfront, or ongoing payments, and in return receives return payments of principal and interest for their retirement. Return payments can be for a period of time or for the life of the investor.
Annuity insurance can provide many benefits including unlimited contributions to a tax-deferred income stream. Annuity payments give retirees structure, and a beneficial way to plan their spending, and ensure money for life.
There are three main types of annuities: fixed, variable, and indexed. Here we will focus on the safest, and most common type; fixed annuities. A fixed annuity ensures a standard rate of interest on your investment for a stipulated period irrespective of fluctuations in the economic status of the marketplace.
A fixed annuity provides retirees against the risk of receiving a negative gain on their retirement nest-egg as well as the stability of set payment intervals. A fixed annuity covers investors from market fluctuations and often provides more than a moderate return when considering the tax benefits, combined with the interest rate received compared to other low risk investments such as Government Bonds or CD's.
Fixed annuities can be paid out in one of two ways. An immediate annuity provides payments to the holder as soon as the annuity insurance is purchased. To qualify for this, the investor must be at least 59 and a half, the minimum age to receive payments without penalty. If you are over 60, you can still choose the other option if you wish; a deferred annuity.
The second type of fixed annuity is the deferred fixed annuity where the principal amount is left to mature for a certain period of time in a non-taxable form and the interest earned is obtained on the completion of the given period.
Although there are many reasons to consider a fixed annuity as part of your retirement investment portfolio, it does have its own share of drawbacks, and don't let anyone tell you differently. One issue with annuities is a lack of liquid capital. Money invested into fixed annuities can be withdrawn before the age of 59 and a half, however, not without penalty from the IRS, and possibly an additional penalty from the insurance provider. Always consider your financial position before investing.
This article is an overview of a fixed annuity, but it is nowhere near a complete assessment. Always consider the financial implications, and your personal situation before making a decision on any investment or insurance product. - 29969
Annuity insurance can provide many benefits including unlimited contributions to a tax-deferred income stream. Annuity payments give retirees structure, and a beneficial way to plan their spending, and ensure money for life.
There are three main types of annuities: fixed, variable, and indexed. Here we will focus on the safest, and most common type; fixed annuities. A fixed annuity ensures a standard rate of interest on your investment for a stipulated period irrespective of fluctuations in the economic status of the marketplace.
A fixed annuity provides retirees against the risk of receiving a negative gain on their retirement nest-egg as well as the stability of set payment intervals. A fixed annuity covers investors from market fluctuations and often provides more than a moderate return when considering the tax benefits, combined with the interest rate received compared to other low risk investments such as Government Bonds or CD's.
Fixed annuities can be paid out in one of two ways. An immediate annuity provides payments to the holder as soon as the annuity insurance is purchased. To qualify for this, the investor must be at least 59 and a half, the minimum age to receive payments without penalty. If you are over 60, you can still choose the other option if you wish; a deferred annuity.
The second type of fixed annuity is the deferred fixed annuity where the principal amount is left to mature for a certain period of time in a non-taxable form and the interest earned is obtained on the completion of the given period.
Although there are many reasons to consider a fixed annuity as part of your retirement investment portfolio, it does have its own share of drawbacks, and don't let anyone tell you differently. One issue with annuities is a lack of liquid capital. Money invested into fixed annuities can be withdrawn before the age of 59 and a half, however, not without penalty from the IRS, and possibly an additional penalty from the insurance provider. Always consider your financial position before investing.
This article is an overview of a fixed annuity, but it is nowhere near a complete assessment. Always consider the financial implications, and your personal situation before making a decision on any investment or insurance product. - 29969
About the Author:
John C. Ryan authors content about annuity insurance, providing investors with the information they need to examine their fixed, variable, and index annuity options.
