Are Annuities Important?

Posted on June 26, 2013

Do you ever wonder if you should have annuities?  Maybe you have heard of them or know a little about them but really aren’t sure if they are important to your financial planning.

Annuities are a savings tool that can help you create a nest egg for retirement, make substantial investments that will grow over time, and get tax benefits.

Annuities are essentially contracts that people can enter into with insurance companies that assure capital gains in return for payment of premium.

Did you know that annuities have been around through history?  They can be traced back to the Roman Empire where for a onetime payment citizens were promised a lifetime stipend, paid once a year.

Now, since that time, annuities have become versatile and offer diverse investment options with the basic purpose remaining the same, which is to ensure financial security for your retirement.

A good investment provides the investors all that they desire from it.  To get a better understanding of the importance of annuities it is crucial to know about some of the annuities available in the market today.

  • Fixed annuities offer a fixed rate of interest for a certain amount of time, after which the rate of interest may be revised.  These are great if you want to play it safe with your investment.
  • Lifetime annuities provide a regular source of income to the investor and can be invested with a onetime payment or by making multiple contributions.
  • Immediate annuities provide a regular source of income to the investor as soon as the investment is made.
  • Deferred annuities allow the investor to postpone income payments from the annuity.

Annuities are tax deferred, which means the money invested in annuities is not taxed until you make a withdrawal or begin to receive income payments.

Annuities are an excellent investment options for all types of investors, whether you like risk or don’t and they are a wonderful way to ensure financial security for when you have retired.

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