Annuities
as supplement to Retirement Plans
Example of when annuities can be useful.
If you retire at age 65, how will you fund
the next stage of your life? Annuities offer a flexible way to
fund lengthy retirement.
For long-term goals
Annuities are issued by a life insurance
company, an annuity contract allows you to accumulate money for
long-term goals. Unlike IRA s and employer retirement plans,
there are no limits on the amount you can contribute to an
annuity. It can be an excellent supplemental retirement savings
vehicle and offers a range of other benefits, including:
-
Tax deferral. Instead of paying taxes on your
investment earnings each year, they grow tax deferred
until withdrawal.
- Choice of accumulation alternatives. You can choose
from two basic types of annuities: fixed and variable.
The main advantages of fixed annuities are the
protection of principal and security against market
fluctuations. You generally receive a guaranteed minimum
rate of return for a specific period of time (guarantees
are based on the claims-paying ability of the issuing
company).
With a variable annuities, you can seek potential
opportunities in the investment markets and obtain
professional money management. You choose from a range of
portfolios designed specifically for annuities; typically,
these portfolios are comprised of stocks, bonds or money
market securities. Your returns are based on the
performance of the underlying portfolios.
- Flexible payout options. When you’re ready to withdraw
money, select the payout option that best suits your
situation and needs. You may choose a single lump sum,
periodic payments for a length of time or payments
guaranteed to last for your lifetime.
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