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Annuity for retirement probably the most prudent decision you will make for yourself and your future. It is important that you start investing your money now. One of the investments that a future retiree may consider for his / her future is variable annuity.

Variable annuity is an investment instrument offered by insurance companies for a minimal insurance.

Variable annuities are classified according to deferred or immediate. The deferred annuity will need at least five to ten years before you can withdraw your money while with immediate you can arrange with the company for you to get money right after you deposited the first payment. Most people who are already near the retiring age chooses the immediate so they will not have to wait long to get a money.

Pros and Cons of a Variable annuity for retirements

According to financial advisors, variable annuity is beneficial since it is not yet taxed during the entire period of the contract. The only time that it will be taxed is when you decide to withdraw the money. In the case of variable annuity, the ideal age to withdraw is 59 ½ years of age. By this time, you can withdraw the money and you will only be taxed more or less with 39%. It means you will only be taxed with thirty nine percent after 15 to 22 of saving your money in annuity. This process is much favorable to annuitant compared to mutual funds since the latter is always heavily taxed.

The only disadvantage for variable annuity is that early withdrawal may cause penalties. The penalty for early withdrawal may be high and may hurt your savings tremendously so make sure that when you purchase a variable annuity, you are ready to wait for several years before you can get hold of money.

Variable Annuities for Dummies

The money that you save in annuities is then reinvested by insurance companies to other investment instruments like bonds and securities. Since it covers securities and bond, annuities are under regulation of Securities and Exchange Commission and those who sell annuities should be licensed by Securities Dealers.

Since variable annuity involves securities, it is important that an investor knows that like any other investment, there might be some risk of loss.

To lessen the risk of loss, the investor is given a chance to select a number of funds during the accumulation stage. The investor will decide where he or she wants the money to be invested. As the annuity owner, you may choose to put in one premium all your money or to divide them in series of funds.

When the distribution period begins, the annuitant will be charged with series of taxes, which may equal to at least thirty-nine percent. The annuitant will decide if he or she wants to get lump sum money, which can be up front, or you will decide to divide the money for at least different payouts. The exact value of the annuity may differ from the invested money and the life expectancy of the holder.

To know more about variable annuity and get the best rates, you may get a free quote today by entering your ZIP on the top of this page and answering some basic questions.