As citizens approach middle age years and look towards retirement, the hope of a secure future becomes an important part of our psyche. One great way to ensure a secured financial future after retirement is by investing in annuities. Setting up an annuity for retirement has become very important since we now have longer life expectancy and desire to maintain the same level of lifestyle during retirement.
Setting up an Annuity
To set up an annuity for retirement plan, the first step is to invest some funds from your currents earnings with a reputable annuity plan provider. Though a pre-requisite to this first step is adequate knowledge of the different types of annuities available the actual benefits and possible earnings on your investment and also the proposed withdrawal plan during your years as a retiree.
The two broad categories of annuities are the immediate annuity and deferred annuity, which are defined based on their naming. With immediate annuities, you can start to receive payouts just a few months after your initial investment. However, with deferred annuity, your investments accumulate for years and you receive payouts at a later period in life, most likely after retirement from paid employment.
Under these two categories, we can further classify annuities as either fixed or variable depending on the payout structure you opt for. While some people opt to receive payouts for the rest of their lives, some can opt to receive payout for a specific number of years. These choices are usually based on the agreements signed with the annuity plan providers.
Benefits of Annuities
The greatest benefits attached to annuities are the opportunities to make large amounts of investments while deferring tax payments for long periods. This is due to the fact that there are no restrictions on the amounts you can invest on annuities and the investment is tax free even during the years of payout. Taxes will only be levied on the interest income while the principal invested is free from taxes.
Conclusion
As one senior citizen puts it; “In retirement we should be more concerned with keeping what we have earned rather than risking loss by wanting to increase what we’ve earned.” The good part about annuities is that they ensure that you can get what you have earned, in addition to giving you some profits during payout. Generally, annuities are very safe and risk-free, and have proven to be one of the very best retirement plans in use within the USA today.
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