Annuities - Overview
Developing a personal financial plan that will provide certainty for you and your loved ones can be a complicated and sometimes daunting experience. With low interest rates and extreme market volatility the available options for retirement planning savings have dwindled in recent years. Despite this, the one option that stands out in today’s volatile investment market is an Annuity. Annuities have grown in popularity in recent years because their flexibility, safety, and performance record. The three main features of an annuity as an investment vehicle are:
- Principal guarantees backed by the issuing insurance carrier
- Tax Deferred Growth
- Guaranteed Life Income Payouts
Generally there are two classifications of annuities: Deferred Annuities & Immediate Annuities.
Deferred Annuities: are short or long-term cash accumulating vehicles. During the accumulation phase of a Deferred Annuity, the money you put into the annuity earns interest. All earnings grow tax-deferred as long as the money remains in the annuity. Additionally, the principal invested in the annuity is guaranteed by the issuing insurance carrier.
Immediate Annuities: are short-term income producing vehicles. An immediate annuity is designed to provide income payments that start within one to twelve months of purchasing the annuity. Immediate Annuities can successfully manage the risks associated with outliving your assets as the income payments you receive can be guaranteed for life by the issuing insurance carrier.