Knowing the annuity advantages would be beneficial for retirees, particularly those who are close to retirement age. Several advantages come with annuities. This includes having an income for retirement, protecting the value of your investment, avoiding inflation, protecting estate taxes, and financial planning. With all these benefits, it is easy to understand why this type of investment has been a popular option for many retirees. The following are some of the other advantages of annuity benefits.
Tax-Deferred Growth: With annuities, you gain tax-deferred access to your earnings. This can be very helpful in your quest for outliving your retirement. Deferred growth means that tax payments are not incurred until some future date. This ensures that any amount that accrues will have a fixed rate of interest. You may even sell your annuities for immediate cash if you so desire. Death benefits: Annuities also provide your beneficiaries with a death benefit which is paid upon the holder’s death.
Lifestyle Insurance: Perhaps the most prominent of all annuity advantages is the fact that they provide you with a lump sum of money upon your death. If you opt for a traditional lump-sum payment, you might opt for 100% interest coverage.
However, if you prefer an annuity with a low-interest rate, you can choose to purchase insurance that comes with a variable rate. Most insurance companies offer these products. It is also possible to use your tax returns as a source of lump-sum funds. However, there are restrictions when using returns from tax returns.
Guaranteed Death Benefit: Some annuities feature a guaranteed death benefit. Those who wish to accelerate their payout phase, they can do so by opting for indexed annuities. With indexed policies, your future annuity income stream will be tied to the performance of the stock market. These plans are especially popular among middle-aged males who are wary of putting their entire retirement funds at risk.
Limited Taxes on Excess Payments and Surgeries: Taxation is limited to excess payments and surgeries. This essentially means that the interest you pay on your annuity interest will not be taxable unless you withdraw it. In addition, the annuity payments that you receive will not be taxable until they are fully earned.
There are many other annuity advantages. However, these four are the most common. They include guaranteed retirement income, guaranteed death benefit, and limited taxes on withdrawals. While annuities are certainly not right for everyone, they can be a great choice for retirees who are worried about money during their golden years. For additional information regarding annuities and other investments, talk to a qualified financial advisor.