Reasons to Consider Annuities for Retirement Planning
Annuities for retirement can help you stabilize and customize your income.
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Are you planning for retirement? Although there are a variety of long-term financial products available, one option that’s often overlooked—because it may not be understood—is an annuity.
But when people learn about annuities, they’re more likely to have positive opinions about them and are six times more likely to own them, according to a study by LIMRA Secure Retirement Institute.* So what are some of the benefits of using annuities for retirement?
Income
Since we’re generally living longer than previous generations, it’s a good idea to have a source of income that doesn’t run out. A guaranteed-income annuity can provide an income from your savings for as long as you (or you and your spouse) live.
Flexibility
As an owner of a guaranteed-income annuity, you can customize how often you are paid, set your payout so it increases to offset inflation and much more.
Diversification
The basic design of a retirement portfolio includes a solid base of lower-risk financial products. Because fixed annuities offer steady, guaranteed interest rates, they can help provide stability to a retirement portfolio.
Tax deferral
Tax on the earnings of an annuity is generally deferred until withdrawal, allowing your money to accumulate faster because it grows in three ways: Your premiums earn interest, your interest earns interest and the taxes you would have paid are deferred to a time when you typically have less income and a lower tax rate.
These features can make annuities an attractive option for a retirement portfolio.