Puritan Financial Group Retirement Annuity
Puritan Financial Group Retirement Annuity
Puritan Financial Group Annuities can play a role in your retirement plan - but you need to understand the various options and how they will work in your unique situation. Consult a financial advisor to help you structure the best investment strategy for your situation. Puritan Life offers a retirement annuity review that you may find helpful.
What Is An Annuity
An annuity is a contract between an insurance company and an investor. The insurance company promises to pay the investor a specified amount of money, periodically, for a specified period. An annuity can provide a kind of retirement-income guarantee. You contribute funds to the annuity now in exchange for a guaranteed income stream after retirement.
Many annuities also have tax benefits allowing you to reduce your taxable earnings in the years you are investing in the annuity. They also allow your investment to grow tax-free until you begin to withdraw funds from the annuity.
Annuities for Investors Close to Retirement
There are basically two types of annuities - deferred and immediate. Each can have a role in your retirement planning depending on your particular situation.
Deferred Annuities
Deferred annuities are a good option for the investor who is looking toward retiring in the next 5-10 years. Deferred annuities have a surrender charge if you withdraw funds from the annuity before a stated period, typically between 5 and 10 years. There is also a tax penalty if the investor withdraws funds before the age of 59 .
There are several versions of deferred annuities to choose between depending on your appetite for risk and desire for return on your investment. Two of the more popular are:
Fixed deferred annuities are often preferred by older investors who are looking for a low risk investment with a guaranteed minimum growth in the next 5-10 years. These investors are willing to forego the possibility of higher growth potential for a guaranteed return on their investment.
Variable deferred annuities might appeal to some but the investor has to balance the benefit of the possibility of higher growth rates and tax deferral with higher risk associated with the variable returns and the expense drawbacks of the variable annuity.
Immediate Annuities
Immediate annuities, unlike deferred annuities, have no accumulation period and generate an immediate income stream. Investors close to retirement or already retired find immediate annuities helpful if the investor has accumulated funds, a large inheritance, or lump sum pension withdrawal they want to invest in an annuity in exchange for a guaranteed lifelong income. Immediate annuity payments can be structured for a specified, fixed amount or an amount that varies over time depending upon your choice of annuity package.
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