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Annuities
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Annuities

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An Annuity is a retirement investment vehicle offered mostly by Insurance Companies.

There are two types of Annuities, immediate and deferred. Immediate Annuities provide immediate income and Deferred Annuities allow the investments to grow before income is distributed. They are subject to early withdrawal penalties just like an IRA if you withdraw before age 59 .

Immediate Annuities are usually invested in vehicles with fixed returns. Deferred Annuities are offered in both Fixed and Variable accounts.

You can think of an Annuity as a vehicle providing a supplemental Social Security check once you retire. When you “Annuitize” an Annuity, you can get a check until your death, or even the death of your spouse. There are also numerous other Annuitization options available.

Annuitization is simply stopping the investment phase and beginning the distribution of the funds. While the money is in the investment phase, the gains are not subject to taxes. Once you begin to take income from the Annuitization, the income become taxable.

Annuities are now also offering “Portfolio Guarantees” varying from principle guarantee against losses of the account value or thru income withdrawals. Remember this is not a government or bank guarantee. Check to see what the rating of the Insurance Company is before investing.

Also, since Annuities allow the investor to defer taxes till Annuitization or income withdrawal, they are an excellent way for high tax bracket investors to invest unlimited amounts of money for retirement.

Because they offer guarantees and lifetime benefits, Annuities have higher management costs which detract from the returns. The more options you add to the product, the more the costs. But like everything else, you get what you pay for.

Please choose from the list of topics for additional information:

401K Rollover Annuities Bonds Investing
Corporate Bonds Forex Trading Futures Trading
Investment Advice IRA Investing Mutual Funds
Mutual Funds Comparison Options Trading REIT
Roth 401K Roth IRA Tax Liens
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