The objective of virtually every working professional is to be able to retire with enough money to live comfortably and maintain one’s pre-retirement lifestyle. A retired life should ideally be free of stress, especially with regard to finances. Annuities are excellent financial tools that allow people to invest in a manner suitable to them and their financial situation. An annuity is basically a contract that an individual has with an insurance company. The investor pays a premium or multiple premiums and in return is guaranteed certain capital gains. There are many different types of annuities, such as fixed annuities, immediate annuities, life annuities, equity-indexed annuities, deferred annuities, etc, Various types of annuities offer individuals different features and terms of investment. The deferred annuities, like the name suggests, provide payment from the investment at a later date, as selected by the investor.

There are two types of deferred annuities: fixed deferred annuities and variable deferred annuities. What is common between the two is the fact that the income from the annuity is received at a later date. The rate of interest on the deferred annuities would depend on the type of deferred annuity that the investor has selected.

Why Choose Deferred Annuities?

Deferred annuities are tax deferred. Pre-tax income is invested in the annuities and only at the time of withdrawal or when income payments begin are the gains taxed, and that too as ordinary income. The interest is compounded and thus the longer the time period of the investment the better the returns. The deferred annuities have a two-stage plan. The first stage involves payment of premium or premiums and the second stage or the income phase is when the individual begins to receive payments from the deferred annuity. Some of the advantages of deferred annuities include:

The life expectancy of individuals is going up and it is important that they have enough money to keep them comfortable in their retired years. Deferred annuities offers individuals, old and young, an opportunity to secure their future.