How A Retirement Annuity Can Help You
You might start hearing a lot about an insurance product called a retirement annuity soon
, or you may already be hearing about it. This is only to be expected with the current economic climate in the country. The reason that things like retirement annuities and other retirement products are being introduced is to help people to properly plan for their retirements. In recent years, a variety of circumstances have forced our retirees out of retirement and back into the work force. These circumstances can be anything from failed investments to children who need help in these tough economic times.
The economy has affected everyone, but we are learning from it. We have started planning better for our retirements and the market has rolled out new products designed to help everyone. One of those products is called a retirement annuity. This product is an insurance policy for your retirement, and works just like any other insurance policy. You will pay your premiums, either in a lump sum or over a series of monthly payments from the date you buy it until it pays or you have funded the account in full. Your premiums are paid into either an interest bearing account, much like a savings account or CD, but with higher interest rates; or they are used for investments. Investments can potentially pay off much better, but with the savings account style you are guaranteed not to lose money.
A retirement annuity is helpful if you believe that your current retirement accounts; such as your IRA, 401(k) or Social Security; would not be enough to carry you through your entire retirement. It is also an excellent tool to fun anything you may need above and beyond your other retirement account balances; such as travelling, an expensive hobby, or just in case your family needs help from you. Retirement annuities, usually, are not designed to fully fund your retirement. They should almost always be used in conjunction with other accounts, and are generally funded after you have maxed your other options or when you have almost reached your maximum contributions.
A retirement annuity can be an excellent tool for insuring that you have enough money to make it through your retirement. Like any other income, you can use it anyway you like, any time after you have retired. The earnings will grow tax deferred, so you would not be taxed until you withdraw it. At that point, the taxes will be assessed at your current income tax rate, and not the rate when you were working. Your retirement annuity can prove a useful tool for your retirement needs.
by: Katherine Smith
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