As part of an overall retirement strategy, annuities can be a favorable option and guarantee an income stream for life.
The biggest advantages of an annuity are tax deferment and no maximum contribution limit. In addition, you will likely be in a lower tax bracket once you retire and start taking income, so the annuity policy will be taxed at a lower rate.
There are two basic types of annuities: immediate and deferred. With an immediate annuity, you can generally start receiving payments in about 30 days. A “deferred” annuity enables you to receive payments at some point down the road. You put in a lump sum or build up funds over time (by contributing a monthly amount) then you convert that amount, or “annuitize” it, into an income stream.
Each of these offers a fixed or variable option. A fixed annuity provides a payout that is a predetermined fixed sum, while a variable annuity is tied to the performance of the overall market, a specific group of investments, or a combination of the two.
Owens Group can educate you on the benefits and costs of annuities, and help determine how well suited they are to you. Let us help assess your options and figure out an effective and secure plan for your retirement.
Life, Health & Employee Benefits Manager