A contract whereby a consistent income stream is provided by an insurer in reciprocation of payments made by an individual is what is called annuity. The fact that you can still qualify for retirement income through an annuity makes this a preferred option, not just for the young but also among those who are closing up to their retirement years. why not get payroll companies involved? perhaps you might want to know if they can offer you annuity.
Annuities can be used so as to help you to increase your savings and more so, continue to protect the amount that you had already saved. All this comes with a view of ensuring a consistent income stream. Annuities fall into two major categories. These are income and deferred. Each of these types works differently and offers its own unique merits or advantages.
Tax-Deferred Annuities -- For Retirement Savings
If you want to boost your retirement's savings, this might be a good option to settle. With this arrangement, once you have made the allowable contribution to your IRA or 401(k), like the case is for tax-deferred investments, your earnings start to compound over time. This then provides you with limitless growth opportunities that most taxable accounts do not offer you.
It is also important to note that deferred annuities do not have any IRS contribution limits. This allows you to invest as much money as you want for our retirement. You could as well make use of your savings so as to create a guaranteed income stream for your retirement. Depending on the nature of the annuities, there are instances where minimum required distributions are not a vital aspect.
Income Annuities -- For Income during Retirement
These types of annuities are the best choice for those investors who are in or are near retirement. This is because they do offer such people guaranteed income for their whole life or for a certain period of time. They can allow you to be even more aggressive with any other investments that are currently in your portfolio. This is because they offer you a guaranteed lifetime stream of income. You also have to understand that, with this kind of an arrangement, you may have a limited or even no access to assets that are used in purchasing income annuities. The options that you can settle for in this case are
Immediate variable annuities
Fixed income annuities
Deferred fixed income annuities
Living benefit annuities -- for Growth Potential and Income Generation
Millions of people across the globe who are nearing their retirement are looking for ways through which they can establish a consistent flow of income in the long-term. They want to see this happen while still participating fully in the market operations. These annuities are normally seen as being hybrid annuities which can offer a guaranteed lifetime income stream. One thing you need to understand here is that income payments won't be reduced as a result of poor market performance this holds water even in cases where contract values would have declined considerably. Depending on your situation, you can settle for any of these options.