What annuity is best for You?
About Annuities: Making Smart Financial Investments for the Future Today
One of the more popular forms of investments today is annuities, which basically are insurance products that are designed to pay out income in steady streams. Annuities are ideal for those people who are planning for their retirement.
If you are looking to enter retirement when you hit a certain age, but still want to receive regular income, then you might want to look into what annuity is and what sort of benefits you stand to gain by purchasing an annuity. Depending on the type of annuity that you purchase, you can essentially assure yourself that you will have some sort of financial fallback when you do eventually enter retirement.
What Annuity do you need to choose?
If you know what annuity is then you should also know that your initial investment comes back to you when the annuity makes a payment or a series of payments to you. In most cases, the amount of money that the annuity pays you can be given every month, every quarter, every year, or even in the form of a single lump sum payment.
Factors such as the amount of time you are expected to continue receiving regular payments from the annuity, and the frequency by which the payments are given to you determine how big or how small a payment you receive. Additionally, the amount that you receive can also depend heavily on what annuity type you decide to purchase. A fixed annuity is a type of annuity that guarantees regular payouts.
Fixed annuities do not rely on any underlying investments in order to determine the amount of payment that you receive. Instead, fixed annuities work very much like certificates of deposit, where you receive a guaranteed amount of money for a specific period of time.
On the other hand, variable annuities are essentially a tax deferred retirement vehicle that gives you the option to choose from a selection of investments. The payments that you receive from variable annuities, unlike those from fixed annuities, vary with how your annuity’s underlying investments perform in the market. Nevertheless, regardless of what annuity type you go for, annuities are a great way to financially prepare for your future.
Deciding What Annuity type suits you
Knowing what annuity type to purchase usually requires careful research. Aside from being either fixed or variable, annuities can also be categorized as either deferred or immediate. Deferred annuities are annuities that make use of investment opportunities. Deferred annuities let you take out withdrawals after a set amount of time, while immediate annuities allow you to receive payments soon after your initial investment is made.
While deferred annuities do not pay out to you immediately, you do get the benefit of having your money used in various investment opportunities, opening up the possibility of you receiving a higher payout. Immediate annuities meanwhile are ideal for people who are nearing their retirement age, and no longer have the time to have their money used as an investment. Careful research regarding what annuity type suits you best can increase your chances of maximizing your annuity’s potential for growth. For more useful articles on annuity please browse through http://www.whatannuity.com/what-annuity/ .