Retirement planning is a critical aspect of planning for your future! It’s essential to have a plan in place to ensure that you are protected once you retire. A popular option for those planning for retirement is annuities. An annuity is a financial product that provides a steady stream of income in exchange for an initial investment. Let’s dive into why annuities are a great option to consider when looking into your financial future.
What is an Annuity?
An annuity is a contract between you and an insurance company where in exchange for a lump sum or a series of payments, your insurance company will pay you a stream of income for a specified period or the rest of your life. Fixed annuities, variable annuities, and fixed-indexed annuities are the most common types! For more information about the differences between these annuities, give this blog a read!
How Can Annuities Help with Retirement Planning?
Guaranteed Income
An annuity will provide you with a guaranteed source of income. Knowing that you have money coming in each month can help you plan your retirement expenses and budget to ensure that you have enough money to cover your needs.
Tax Benefits
Some annuities offer tax-deferred growth, this means that you don’t have to pay taxes on the money that you earn until you withdraw it from your account. This can be beneficial for individuals that may be in a higher tax bracket before retirement, and a lower tax bracket after retirement.
Estate Planning
Annuities can also play a role in effective estate planning. Depending on the type of annuity you choose, you can name a beneficiary for the remaining balance of your funds in the event of your death. This is a great way to ensure that your loved one’s futures are secure.
Protection from Market Fluctuations
One of the main benefits of an annuity as opposed to an independent investment in the stock market is that annuities are not solely tied to the stock market value. This means that in most cases, you are guaranteed a pre-determined amount of income, regardless of how your investments perform.
Flexibility
Annuities are offered in many different forms and can be tailored to meet your individual needs. Annuities offer a wide range of payment options so policy holders can find a stream of income that suits their needs.
Future Protection
An annuity can provide you protection against outliving your retirement savings. In the event of unforeseen circumstances, retirement savings can dry up quickly. An annuity ensures that you have money coming in every month.
Planning For Your Retirement? Our AIB Team Can Help!
Annuities can be a valuable tool for retirement planning! Offering a guaranteed source of income, tax benefits, and future financial protection, annuities can be a great option for those looking to put a plan in place. Understanding annuities, and which type is right for your needs, is an essential part of planning for your retirement. Talk to our team today to discuss which options are right for you!