How Retirement Annuities can help
It is important to always consider the time frame that you are going to begin spending your retirement savings. Once you’ve determined the number of years you will be investing, your tolerance for risk and how long you will need the income to last, it will be much easier to choose an asset allocation strategy. This strategy will serve as a blueprint to help guide you in determining how much and where to direct your investments.
Deferred annuities, also known as Guaranteed retirement savings annuities, provide a powerful tool to securing a guaranteed lifetime income in retirement. Due to the strong tax advantages, deferred annuities can build retirement savings much faster than taxable alternatives. Then, when the time is right for you, you turn those savings into income guaranteed to last an entire lifetime.
If you’re not familiar with annuities, they’re basically a contract with an insurance company, whereby you make a lump sum or series of payments that the insurance company invests. After a period of time, you decide when, the insurance company returns your money, plus earnings. You also decide if you want to receive your money in a lump sum or as a steady stream of payments over a number of years. The option to receive a stream of payments is called an annuitization – it’s one of the things that make an annuity unique. Knowing you’ll receive steady income payments to supplement Social Security or other retirement income is reassuring as you grow older.