Annuities: Customizable Retirement Solutions
Guaranteed Lifetime Income
Annuities are fundamentally unique in the realm of financial products, as they stand alone in their capacity to offer a secure and assured lifetime income. This distinguishing feature effectively mitigates the apprehension of depleting one’s savings in the course of their lifetime. Although there are indeed alternative disbursement options available, the provision of a lifetime income remains the prevailing choice for the majority of individuals seeking long-term financial security.
Customizable
Since annuities are insurance products, you have a lot of options, and most can be customized through optional add-ons called riders to provide added benefits. As part of a well-rounded retirement plan, annuities can provide some protection for you and your family. That could include a death benefit (provided you didn’t start your income), a survivorship clause, or being able to pass the annuity on to heirs. This makes them more flexible than many retirement savings vehicles.
Tax-deferred growth
Tax-deferred growth for annuities is a big plus for retirement planning. It means your investment can grow without being taxed until you take the money out, so you could end up with more savings in the end. This helps people save more for retirement and handle taxes better. The taxes you’d normally owe on the gains each year remain in your account and grow, often leaving you with higher balances down the road.
You can purchase an annuity within a tax-advantaged retirement plan (i.e. IRA, TSA, SEP), but it’s important to note that tax-qualified retirement plans already provide tax deferral under the Internal Revenue Code, so the tax deferral of an annuity does not provide additional benefits.
Flexible Contributions
Both 401(k)s and IRAs have annual contribution limits, which can limit your ability to maximize savings, especially as retirement approaches. On the other hand, deferred annuities offer a unique advantage by not imposing such restrictions, allowing individuals the flexibility to contribute as much as they desire. This means that whether you choose to make one substantial lump sum payment or a series of payments over time, you have the freedom to do so within the guidelines set forth in your annuity contract. It’s important to note that there is a minimum contribution required to initiate the annuity.
Charges & Penalties
Before making any decisions on which annuity to move forward with, we will explain any charges or penalties you may incur with the carrier. There are surrender charge and/or tax penalties to consider. We’ll help you choose an insurance company that is strong and built for the long term. We only work with trusted insurance carriers. The guarantees associated with annuity products are based on the claims-paying ability of the issuing company. To find the best product for you, we’ll help you shop options.
