Annuities are financial products that can be used as part of a retirement planning
strategy. They offer a way to accumulate and distribute funds for retirement. Here are
some key points to consider when using annuities for retirement planning:
Benefits of using fixed annuities for retirement:
- Guaranteed income: Fixed annuities provide a predictable and guaranteed income stream during retirement. The insurance company assumes the investment risk and guarantees the principal and interest rate.
- Tax-deferred growth: Your money grows tax-deferred within the annuity, meaning you don’t pay taxes on the interest earned until you start receiving payments. This can be advantageous if you’re in a higher tax bracket during your working years and expect to be in a lower tax bracket during retirement.
- Protection from market volatility: Unlike other retirement investments such as stocks or mutual funds, fixed annuities are not directly tied to the stock market. This can provide stability and protection from market downturns, making them a suitable option for conservative investors.
- Death benefit: Fixed annuities often include a death benefit, which guarantees that your beneficiary will receive the remaining value of the annuity if you pass away before depleting the funds. This can provide financial security for your loved ones.
