Exploring Immediate Retirement Annuities
As soon as you leave the employed pool and have stopped receiving the benefits of a steady source of income from your job, you will need to find other means of gaining profit from your investment portfolio. There are many companies that can help you find a solution, such as Puritan Financial Group. Make sure you gear your assets towards financial growth but you also need to allot a big part of your investment for conserving your principal. In other words, people close to retirement generally have a low tolerance for risk, and are more likely to need income from fixed sources such as annuities over the income they receive from assets like stocks.
Immediate Annuities versus Deferred Annuities
There are different types of annuities and a lot of retirement planners would advise that you retain a portion of your assets from a deferred annuity to an immediate annuity. So what's the difference? A deferred annuity is one where you continually put money into a fund to be used at a later date. The money you invest earns interest but the taxes on these are deferred. While you may withdraw money from this type of annuity, it is strongly discouraged. There is a penalty when you withdraw money and this penalty can be as high as 10% of your investment. An immediate annuity, on the other hand, is one where you may be able to withdraw money in as short as a month after you make your initial investment. If you are already retired or very near your retirement age, then an immediate annuity is actually a very good option.
When to Buy Immediate Annuities
Immediate annuities can be practical investments for people in various financial and personal situations. For example, a person who used to participate in employer-sponsored defined-contribution plans can withdraw the money in his account and use that money to buy an immediate annuity - this gives him the ability to add to his guaranteed income streams. Companies can also finance pension plans with defined benefits via investments in immediate annuities for their employees. If the future annuity buyer has exhausted means such as making maximum contributions to his 401K or IRA, he can also benefit from immediate annuities.
If you plan to go for an immediate annuity, you have the option to structure payments so that they vary with the performance of a particular set of investments. This is what is referred to as a variable immediate annuity. It is a variation of an immediate annuity with your money being invested in mutual funds and the like. As such, the amount you will get will be based on market conditions. To learn more about the different types of annuities you should contact a company such as Puritan Financial Group.
Immediate annuities have become popular over the years due to the growth in its target market. People retire early and the advancement in science and medicine has made it possible for senior citizens to live longer compared to before. A person who retires at the age of 60 is likely to live until the age of 80 and beyond, allowing him to enjoy the benefits of an immediate annuity until his last days.
Immediate Annuities versus Deferred Annuities
There are different types of annuities and a lot of retirement planners would advise that you retain a portion of your assets from a deferred annuity to an immediate annuity. So what's the difference? A deferred annuity is one where you continually put money into a fund to be used at a later date. The money you invest earns interest but the taxes on these are deferred. While you may withdraw money from this type of annuity, it is strongly discouraged. There is a penalty when you withdraw money and this penalty can be as high as 10% of your investment. An immediate annuity, on the other hand, is one where you may be able to withdraw money in as short as a month after you make your initial investment. If you are already retired or very near your retirement age, then an immediate annuity is actually a very good option.
When to Buy Immediate Annuities
Immediate annuities can be practical investments for people in various financial and personal situations. For example, a person who used to participate in employer-sponsored defined-contribution plans can withdraw the money in his account and use that money to buy an immediate annuity - this gives him the ability to add to his guaranteed income streams. Companies can also finance pension plans with defined benefits via investments in immediate annuities for their employees. If the future annuity buyer has exhausted means such as making maximum contributions to his 401K or IRA, he can also benefit from immediate annuities.
If you plan to go for an immediate annuity, you have the option to structure payments so that they vary with the performance of a particular set of investments. This is what is referred to as a variable immediate annuity. It is a variation of an immediate annuity with your money being invested in mutual funds and the like. As such, the amount you will get will be based on market conditions. To learn more about the different types of annuities you should contact a company such as Puritan Financial Group.
Immediate annuities have become popular over the years due to the growth in its target market. People retire early and the advancement in science and medicine has made it possible for senior citizens to live longer compared to before. A person who retires at the age of 60 is likely to live until the age of 80 and beyond, allowing him to enjoy the benefits of an immediate annuity until his last days.
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