Is An Annuity Right For You?

By Yvonne Tepsick

If you want to enjoy a financially comfortable retirement, saving early and often is a smart decision. There are a variety of retirement savings products on the market, such as 401(k)s, Roth IRAs (Individual Retirement Accounts), and SEP (Simplified Employee Pension) IRAs. These retirement products enable you to put away your savings and withdraw them later as needed, subject to various conditions.

There is another savings vehicle that is equally useful for ensuring that you have regular income later: the annuity. An annuity is an insurance product where you can invest your money regularly without a limitation on how much you can invest. For people who are behind on their retirement savings, an annuity helps them to save more money toward retirement without the annual contribution restrictions of IRAs.

Another advantage to an annuity is that your money grows on a tax-deferred basis. When you make withdrawals from the annuity, your withdrawals are not taxed but the earnings generated from the investment are subject to taxes.

A third advantage to annuities is that you can structure your payments. You can receive your payments monthly, quarterly or annually, or receive them in one lump sum.

So is an annuity the right choice for you? There are several circumstances where investing in an annuity is a wise option:

You’ve already maxed out annual contributions to your 401(k) or IRA.

  • You need to catch up on your retirement savings.
  • You can afford to allow the money to remain in the annuity for several years before making withdrawals.
  • You want to make sure your beneficiaries will be covered in the event that something happens to you.

There are two main types of annuities available – fixed or variable. Depending upon the type of annuity, you can receive payments soon after your initial investment or you could choose to receive payments later and give your investment the opportunity to grow further.

If you’re interested in investing in an annuity, contact us. We’ll be happy to match you with an annuity to suit your financial needs and explain everything you’ll need to know.

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