Making Annuities Work
There are two parts to the fundamental structure of an annuity:
1. The phase of accumulation
As you would for a mutual fund or other financial product, you invest during accumulation.
At a later date, you can start to make steady payments based on the elected income options, product nature, and your overall value.
Most investors make use of an annuity for retirement savings. During their working life, they make investments and framework the annuity to pay them back after they turn 65. The organized nature of the returns of an annuity allows the investor to use it, if they choose, as a substitute for a paycheck.
Sure, these financial products can be complex, but they are also one of the few sources of life-sustainable retirement income. Most provide protection for the death benefit as well, but this may vary depending on the type of annuity purchased or may differ depending on the annuity plan chosen within that annuity in other types of annuities.
Finding The Right Annuity Type For You
Upon retirement, you may consider purchasing an annuity using your retirement plan. You don’t have to buy an annuity but if you want a regular income, it may be the right solution for you and thus is worth exploring. Buying an annuity may contain options that are irreversible decision, so spending time looking at the options and shopping around is important.
Choosing an annuity means more than just getting the best market value.
An annuity broker who suggests an annuity will have to choose one they think is right for you, based on your information. There are lots of options out there. To make an appropriate suggestion they need full information about your life and financial situation.
Expect your broker to ask about:
1. Your Age
2. Your Financial Situation (assets, debts, income, tax status, how you plan to pay for the annuity)
3. Your Risk Tolerance
4. Your Financial Goals & Experience
5. How You Plan To Use The Annuity
If you are not comfortable with the annuity, ask the broker of your annuity to explain why they recommend it. Don’t purchase an annuity that you don’t understand or it doesn’t seem right for you.
Within the various types of annuities, you have several options for how you want the revenue to be paid. If you have decided to purchase an annuity after getting guidance or advice, you can explore the market to help make sure you can have the choices for yourself and family.
Types Of Annuities
Some annuity contracts provide a means for retirement savings. You can convert your savings into a retirement income channel. Others continue to do so. If you use an annuity as a savings plan, you have a deferred annuity and the insurance provider is extending your payment for long term growth. If you use the annuity to establish a source of retirement income, you get an immediate annuity and your payments start right away.
A variety of annuities are available to fit your specific needs. There are fixed annuities, fixed indexed annuities, variable annuities and Medicaid compliant annuities.