Why an Annuity May Be a Good Investment for Retirement

Why an Annuity May Be a Good Investment for Retirement

Preparing for your golden years post-retirement can be stressful. After all, you have to take care of many details to ensure that your financial situation remains stable. Since traditional pensions are not the norm now, it is up to you to invest in retirement plans to maintain your financial security. Because the most popular retirement plans, 401(k) and the like, are somewhat limited, many employees are now turning towards more lucrative investment vehicles, such as annuities.

Annuities are retirement investment plans that are offered by insurers all over the country. They guarantee that you have a steady flow of income to cover all your expenses as a retiree. In case you have heard about annuities but are unsure if they are the right choice for you, keep on reading to know more about their immense benefits.

They Are Flexible

Rigidity is one of the biggest drawbacks of traditional retirement plans. For example, your contributions to your 401(k) fund are limited, meaning that it is a capped investment. Of course, if you start making contributions just a few years before retirement, you will not be able to amass adequate funds. On the other hand, immediate annuities allow you to make a lump-sum payment and receive money from the insurer right away. This can be a great option for employees that are close to retirement and do not have enough time to make monthly or yearly contributions. By investing in annuities, you can guarantee that you will lead a comfortable life post-retirement even if you have not given retirement plans much thought before.

They Are Offered by Many Reliable Insurers

When looking for worthwhile investment vehicles, you have to make sure that you have many options in terms of the insurance companies you can strike a deal with. Since annuities are becoming increasingly popular, there is an abundance of insurers who provide them. Without a doubt, this gives you an advantage, as this oversaturation means that you will find many competitive deals to choose from. For instance, Athene Annuity and Life Company, one of the most trustworthy insurers on the market, offers many annuity types like variable and fixed annuities that cater to all preferences. If you are thinking about investing in Athene’s products, understanding Athene annuities, their advantages, and how they compare to those offered by other insurance companies is the key to making an informed decision. When comparing insurance companies, make sure to take a look at their financial ratings. The higher the insurer’s financial rating is, the more trustworthy they are. Nonetheless, this should not be an aspect you have to worry about, as most companies selling annuities enjoy high financial ratings, which offers an extra safety net for retirees. When in doubt, you can always check reviews and comparisons to choose the best annuity provider.

They Are Tax-Deferred

Taxes are the archenemy of all types of investments, including retirement funds. However, this is not the case with tax-deferred annuities. With tax-deferred annuities, you can continue making contributions without paying any taxes as long as you are not withdrawing money. For this reason, investing in annuities is a sure-fire way of growing your funds. You will only have to pay taxes when you start receiving payments upon your retirement. This can be a nice perk for those who want to invest in financial products but do not want to be over-encumbered with taxes from the get-go.

They Have Fixed-Returns

Since annuities have many types, you can invest in the ones that offer fixed returns. Fixed annuities protect retirees from market fluctuations by offering payments at a fixed rate. So, regardless of the economic circumstances, you can hedge against any market downturns by investing in fixed annuities. Thus, if you do not like the idea of variable annuities, you can turn to fixed ones instead and have a steady monthly income.

They Provide Extra Perks for Your Family

If you are feeling adventurous and want to capitalize on the rare periods of economic boom, you can invest in variable annuities. Because variable annuities are susceptible to market fluctuations, you might lose money. However, this risk factor comes with an extra perk: death benefits. When you pass away, your dependents and beneficiaries will get a lump-sum payment. For example, if you invest $50000 in annuities, your beneficiaries are also entitled to receive $50000 upon your death.

retirement plans - family

Hedging against market fluctuations is the main concern of many retirees. Since there are many retirement plans you can invest in, it might be hard to make up your mind and find the best one that fits your needs. Thanks to their flexible payment terms, tax-deferred nature, and the stable flow of income they provide, annuities have become every retiree’s first choice. Nonetheless, before making any decision, do your homework and find the best insurer to guarantee that you are putting your money in the right place.