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It’s possible to maintain a steady flow of income when you retire. This can be achieved when you go for annuity for retirement. There are various insurance companies all over the US offering all kinds of annuities. Variable annuities are among the common plans available. Active workers who desire to enjoy steady income flow during retirement always like to go for such annuities.

By way of definition, a variable annuity is a kind of annuity for retirement that allows you the opportunity to choose from a selection of investments and then pays you a certain level of income when you retire from active service. The level of the income you’ll receive is determined by the actual performance of the investments you choose.  You stand to gain a lot if the investments are doing very fine.

The Pros

As a unique annuity for retirement, a variable annuity is tax-deferred. You’re not expected to pay tax from the income you’ll be gaining out of the investments you choose.

Unlike fixed annuities, variable annuities normally build up your savings by giving you the opportunity for long term capital growth. You simply invest any amount or you can invest in any stock or mutual fund portfolio and then watch the income grow. No tax is deducted from the gain accumulated until you’re ready to make withdrawals.

Again, variable annuities are not affected by inflation. This is because of the growth potentials seen in them.

The Cons

If you’re still a beginner when it comes to annuity for retirement, you may have to face some risks that are usually associated with variable annuity.  There’s always the investment risk involved. For instance, if the investment you go for begins to decline, the value of the annuity will also begin to go down. This means you’ll only gain very low income from the investment.

There’s the case of tax.  Although variable annuities are tax-deferred, you still have to pay taxes when you want to make withdrawals.  There are also surrender charges and other variable fees involved.  Management fees and other hidden charged may also apply. All these depend on the terms and conditions involved in the annuity process. The insurance company you’re dealing with also has a lot of part to play in the fees involved.

How or when to Know if Variable Annuity is right for you

Having seen the above description, you may be wondering how or when to know if variable annuity is right for you.  It all depends on certain factors.  A variable annuity as a form of annuity for retirement can actually boost your savings for your retirement period. If you’re looking ahead for a successful retirement, you can opt for this kind of annuity since the income is allowed to grow and then withdrawn on a variable date chosen.

In any case, there’s always the need to be properly guided when search for the right annuity for retirement that can suit you. There’s needed to go for proper financial advice at the hands of a good financial adviser. You also need to take your time to locate a reliable insurance that can give you the best of options. You have to compare various companies and their offers before you narrow down your choice to any of them.