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Annuities
Get guaranteed retirement income on your terms with an annuity
Annuities are financial products used for guaranteed income over a period of time. When purchased, they earn interest, and then when transitioned to withdrawals, they provide a set stream of payments over a certain amount of time (which can be for life). An annuity is usually used to fund retirement. The key benefit of an annuity is that they provide guaranteed payments of a certain amount for a definite period of time - and so you can have security and predictability with your money on your terms.
Many people are living longer, healthier lives, so reliable income that lasts is essential to any retirement. Annuities are often obtained in order to supplement social security income to sustain a happy and financially stable retirement.
Benefits of an annuity:
You can have stable income of a fixed amount, no question, for a set amount of time. You can choose either a term of a certain amount of years, or you can choose to have that income for life (no matter how long you live). You can also have that income continue for surviving spouses, if you choose. This brings about peace of mind knowing you can rely on income.
A traditional IRA or 401K has limits set on how much you can contribute. These means if you want to set aside a larger amount of money for your nest egg for when you retire, you have to rely on more volatile stocks, which are subject to the market. Not so with an annuity. There are no limits to the amount of money you can place in an annuity, and you can direct how the money accumulates interest until you are ready for retirement, similar to a traditional IRA.
One of the things that makes an IRA useful for retirement is that it can earn interest tax deferred when you are building your savings and investments. This means that the interest earned is not taxable, until you are ready to withdraw it. An annuity has this same benefit - you can place money in it and have it earn interest. When you are ready to retire and reap the rewards, you can get a steady paycheck from the annuity, an exact amount you decide on (which is then taxable at your normal tax rate). This means you can accumulate your wealth, saving it for future, and have it earn interest - plus gain security for predictable future income.
Traditional IRA's require withdrawal at age 72, no matter if you are ready or not to begin taking money out. Annuities have no limits. If you choose not to withdraw money, you can leave it in the annuity, continuing to accumulate interest. Plus you can designate survivorship benefits - a beneficiary who can receive the cash value of the annuity should you not use it entirely.
Different features exist to annuities to achieve your desired retirement goals, and no one product suits everyone. By discussing your various annuity options with Kfir Cohen you can find the right product to fit your needs, and help you to achieve your financial success.
Funding an annuity
One key takeaway for an annuity is that you can fund it with your retirement savings. In fact, that is one of the preferred means of retiring with stability – using your retirement savings, such as your IRA, 401K, etc, and rolling it into an annuity, thus guaranteeing fixed income on your terms. By doing so you can avoid costly tax penalties, and preserve your assets while converting them to predictable income stream.
However, you can also purchase an annuity with any lump sum, or partial payments over time. There is no limit to the amount you can pay in, unlike normal retirement accounts.
When purchasing an annuity, you can either obtain an immediate annuity – where your withdrawals and fixed income begins immediately. Or you can purchase a deferred annuity, where the annuity accumulates earned interest (tax deferred), until you are ready to withdraw it, when it converts to the withdrawal phase with your fixed income.
Understand your options and get the best advice for your retirement plans
However you choose to proceed, it is important to understand all aspects of annuities, and what options you have available. You need a consultant who can stand by your side an help you to get the results you desire. Kfir Cohen is the expert you can trust to help you achieve your goals.
