Why Annuities are a Wise Choice for Your Future

Putting off saving for the future for a later time is not a wise decision. You might argue that the money that you are earning today is meant to provide for your present needs and wants. You can always save more money when you receive a big cash flow sometime down the road, right? Wrong. This is the mistake that most people make. However large the amount of money you receive, it will always be easy for you to find things to spend it on.

Only a scant percentage of the population grow old to live a comfortable life. Most people grow old lacking the resources they need to live a decent life. You have to make a paradigm shift in the way you look at savings if you do not want to spend your old age in destitute. You have to sow the seeds today in order to reap the benefits later on in life when you need it more. Try to have annuities explained to you and you will find that it might be a good instrument to use in order to ensure that you do enjoy what you have worked hard for not only today but for the rest of your life.

There are various types of annuities that you can choose from. Your local financial institutions will be able to offer you a range of options. These options are largely determined by the amount of regular contributions that you can make today, the kind of yield you want to enjoy, and the mode of distribution you wish to have during your retirement years. If you have a large amount of money that you can already allocate for your growing your future retirement fund, you can choose to put in a lump sum payment in a single premium annuity.

Depending on your risk profile, you can choose to go for a variable annuity or a fixed annuity. A fixed annuity would assure you of a rate of accumulation for your funds while a variable annuity will allow your insurance company to shift your funds from time to time to take advantage of investment options that would give your money more yield.

Make sure you get all annuities explained because whatever kind of annuity you choose should match the financial situation you are in and the kind of retirement income you wish to enjoy when you retire.

TOP TEN REASONS YOU DON’T NEED A LIFETIME ANNUITY

10. You still live at home and your parents have yet to cut-off your allowance annuity.

9. You grow your own food, make your own clothes, and barter for other needs.

8. You have extremely successful adult children who gave you a platinum American Express card for Christmas with a $100,000 credit limit.

7. You worked in Congress for a year and are now guaranteed that salary for the rest of your life.

6. Your closest friends refer to you as “The Donald.”

5. Your new money manager has promised you that everything is back to “normal” and he will earn you 8% annually, after inflation, for as long as you live.

4 You just received a life sentence without parole and feel confident in the stability of our prison system.

3. Your trust fund could feed a small country.

2. You live in a warm area, wear shorts and flip flops, eat wild nuts and berries and know you can live on Social Security’s after-tax $12,000/year.

AND, THE NUMBER ONE REASON YOU DON’T NEED A LIFETIME ANNUITY

1. You thought money trees were a joke until you found one in your back yard!!

Are Annuities Right For You?

There are many ways to save for retirement or if necessary, a rainy day in the future. Annuities are one example of this. This should then bring you to the question- are annuities right for me? There is one thing that is very important to bear in mind. Purchasing annuities is not the way to go for everyone. You should not buy an annuity if you have not fully funded your 401k, your 403b or your IRA (or if you do not intend to fully fund it for the calendar year presently upon you). These plans are one of the first steps in planning for your financial future and need to be taken care of before you consider investments such as annuities.

Are annuities right for you? That is a question that can be answered with a resounding yes if you have a fully funded retirement plan or plan to fully fund it and have money left over to invest. Perhaps you already have a well rounded and diversified portfolio that includes bonds, mutual funds and a stock or two. Annuities can also be an excellent complement to your portfolio. Let us look closer at how that can be.

An annuity is comparable to a retirement plan in that both allow for tax-deferred compounding until money is withdrawn from the account. However in the case of an annuity you are not limited to the amount of money you can invest. This is a big plus of such.

Most annuities feature a type of death benefit provision of one sort or another. In this case the issuer of the annuity guarantees that upon the death of the purchaser the total premiums will be paid out to the beneficiary (or beneficiaries). Not all annuities handle this in the same manner. Some "step-up" on the anniversary of the date that the purchase of the annuity was made to the highest value of any anniversary that preceded it. Others guarantee a minimum of five to seven percent interest compounded on a yearly basis while still others combine the greater of the two features described here.

But there is more additional benefits to think about when asking the question- are annuities right for me? As long as you are not receiving annuity payments you do not have to report them to the IRS as there is no tax bill nor is there a 1099. As well your creditors cannot go after the money in an annuity if you get behind or default on any debts and an annuity will never go into probate in any one of the 50 states.