Annuities and Retirement

Millions of Americans work hard every day, working at one and sometimes even two jobs and yet most of them have less than $250 in their savings account. They live from one pay check to the next, often wondering where the money was spent. It is important that you understand the need for savings and investment before it is too late and you are facing retirement with very little investment and income. Annuities are an easy and great way to ensure the financial security of your future. They are contracts offered by insurance companies wherein the investor deposits a certain amount of his or her savings and is assured income after a pre-determined period of time. The income may be for lifetime or a fixed period of time.

During the Great depression annuities provided people with a sense of security in knowing that they would have a source of income in the future. There are many reasons why people are turning to annuities and have been for a very long time.

Some of these reasons include:

Most people are worried about outliving their savings and not being able to support themselves in the retired years. Annuities can be invested in a regular manner and one is assured of receiving income for their lifetime or a fixed period of time. Premiums can be paid according to the amount of income you wish to receive in your retired years.
Taxation: As much as 85% of your social security income may be taxed and investments such as CDs are also taxed yearly, in contrast the gains from an annuity investment is taxed as ordinary income only at the time of withdrawal or when one begins to receive income from it. The deferred tax also helps the investment grow in a better manner. Furthermore by the time the investor is ready to receive income from the annuity he or she would be in a lower tax bracket.
With rising inflation it is crucial that you invest your savings in financial investment tools that offer good rates of interest. Annuities are known to provide competitive rates of return, which are higher than for investments such as CDs.
There are many different types of annuities and according to one’s financial situation and investment aims an investment in annuities is recommended. For investors who wish to receive income from the annuity and be assured a fixed rate of income a fixed rate annuity is ideal while for those who wish to start receiving income immediately after investment, the immediate annuity is recommended.
In case the investor dies the beneficiary will receive money from the annuity. An annuity can be held jointly and in case of death of one partner the other will continue to receive the benefits of the annuity.

It is vital that every person invest in their future by putting away a certain amount of savings in annuities. In this manner you are assured that you will have a regular source of income at retirement and that your money works as hard as you do.

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