What Are Retirement Annuity And Positives And Negatives Of Fixed Annuity

By Author: Mike Anderson
Total Articles: 32
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Finance is a very important need of people; without finances one cannot lead a good life. A person may have a good income during his working years but the income reduces after retirement because the pension which he or she receives is not sufficient to fulfill their expenditure and they are in need of some extra income. Therefore, it is necessary to plan your finances in such a way that you do not have to face financial crisis post retirement. One such way is by investing in Retirement Annuity.

Retirement Annuity provides a regular income to the retired people in order to lead a financially stable, secured and happy future life. In Retirement Annuity you are required to pay a sum of money to the annuity provider during the accumulation phase and reap benefits later during the distribution phase. There are many types of Retirement Annuity like immediate annuity, deferred annuity, fixed annuity and variable annuity. All these plans are beneficial and are tailored according to the client’s ability to pay, their requirements and preference of payment after the specified period is over. Thus, investment ...
... in Retirement Annuity helps people to get an additional income after retirement thereby solving financial problems.

A Fixed Annuity is a contract issued by the insurance company promising to pay a guaranteed income on the basis of the investment made by the investor. Fixed Annuity provides a guaranteed income to people after retirement. However, the rate of interest on Fixed Annuity is less than the return provided by the variable annuities. But a Fixed Annuity provides a guaranteed income whereas variable annuities are subjected to market risk. Thus, it is safer and is considered for people who want low-risk investment plans.

Another advantage of Fixed Annuity is that it is tax-advantaged which means that the tax is deferred until the investor withdraws the money. Above all a Fixed Annuity provides financial stability to the investor and therefore, they are relatively safe and appropriate for retirement planning. However, it is advisable to seek guidance from a licensed insurance agent or professionals before purchasing as they can help you choose a plan most suitable for you. You should discuss all important things regarding your financial goals, objectives and risk tolerance. Thus, by discussing clearly you will be able to select one plan according to your needs.

Hence, you can reduce your financial worries by investing in Retirement Annuity or Fixed Annuity depending on your needs.