Annuities - A Steady Way to Grow Your Nest Egg for Retirement
Investing in an annuity is a way to begin your retirement planning. They are a safe, stable way to invest for your future. They can grow steadily and be ready for you when it comes time for you leave the work force. Annuities usually have good rates of return, and earnings are added to the base investment to make them grow even faster.
One thing to think about when starting your annuity is the length of time you will be investing. Funds invested are not usually available, without penalties, until you reach the age of 59 1/2. So make sure that the funds you invest are not needed before that time. This does not mean you cannot take funds out, but be aware that there are penalties.
Since taxes are deferred until you begin making withdrawals, it is a way to earn now and then take disbursements when your income will be at a lower tax rate.
Once you reach the age or 59 1/2, you can begin taking disbursements without penalty, or let it continue to grow.
A fixed annuity has a guaranteed rate for the term of the annuity. You always will know the amount of your returns. Your rate will never go below this rate. If you are close to retirement, this could be beneficial. Plus you have the added benefit of no fees.
A variable annuity has a rate that varies with the market. It has the possibility of a better rate than a fixed annuity, but can be more volatile. There are fees also. You can split the investments, so it is more flexible. If you have a longer period before your retirement, it could be advantageous.
As with any other investment, you should talk it over with your banker/investment personnel.
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