The Advantages Of A Fixed Annuity For Retirement Income Planning

Even a little bit of research on the topic of fixed annuities will allow you to see how beneficial these products can be in strengthening your retirement income planning strategies. These investments, which come with low risk while generating decent yields, are guaranteed by the provider to generate fixed and stable income for the retiree who wishes to offset the overall risks of the other investments in his or her retirement portfolio.

In comparison to other types of annuities and other investment options for the retiree, the concept of a fixed annuity and how it works to generate income is also easy to comprehend. After the investor pays the lump-sum to an insurance company, the money is the placed into a low-risk pool of investments. Since the initial investment from the annuity buyer is distributed among a number of low-risk investments, there is a comparatively small likelihood of investment loss. In addition, any risk that results in the possibility of investment loss is entirely on the shoulders of the annuity provider, making it a great investment for the risk-conscious senior. Unsure about purchasing a fixed annuity to help bulk up your nest egg for retirement? Here are some more details on the advantages of this insurance product.

Set Interest Rates

Interest rates can be locked in for the duration of the annuity contract if you chose CD-type annuities or purchase those that have rates that depend on the fluctuation of interest rates. With both annuities, interest is guaranteed to stay above a specific level as stated in the annuity agreement.

Tax Deferral Benefits

Investment growth within the duration of the annuity is tax-deferred.
This allows your investment to compound more due to a larger overall fund. Because of this, the yield you get with a tax-deferred annuity often outperforms other stable investments in terms of amount vs. risk.

No-cost Distributions

Annuity contracts come with provisions that permit the annuity holder to withdraw within ten to fifteen percent of the balance of the annuity account every year without having to pay extra penalties or charges. This allows the holder a degree of liquidity that may not be present with other investments.

Other Benefits

Fixed annuities with riders and other options may also be purchased to take advantage of a large range of living and death benefits. This makes this kind of retirement annuity one of the best investments for the senior investor, as well as for his or her spouse, immediate family, relatives and other beneficiaries. {pixabay|100|campaign}