Why Annuities Are a Great Investment Option for Seniors
Absolutely everyone needs to prepare for retirement. Even though your post-career years are supposed to be your “golden years”, they can bring plenty of challenges – particularly financial ones. And if you haven’t stashed enough funds to provide for your needs, it can be a challenging time. However, there is a way to both grow your retirement savings and provide yourself with an income once you’ve stopped working. Investing in annuities could be the perfect solution for right now as well as your future, even if you’re already a senior. You can discover the many benefits of investing in annuities with an online search.
Annuities are a great investment option for both the young and old. Even if you’re close to retirement or already well into your golden years, annuities can offer a host of financial benefits. If you’re wondering what annuities can do for you, start an online search today to learn more.
The following are just a few of the reasons why annuities can be a smart investment for seniors of all ages.
Annuities Come in Different Forms
Annuities are a unique type of investment. They aren’t like stocks or bonds; they aren’t even like gold or traditional mutual funds. An annuity is actually connected to an insurance company.
An annuity is a contract between you and a particular insurance company. You essentially “buy” the annuity in either a lump sum or payments over a set period of time. The insurance company then takes your money and invests it for you, most commonly in mutual funds.
Once your money begins to grow and earn dividends, the insurance company will start making regular payments to you.
However, annuities do differ. There are different types of annuities, and each unique type comes with different terms, different payment structures, and different options. There are three common types of annuities:
- Fixed annuities, which guarantee a minimum interest rate on your invested funds and provides a fixed number of payments.
- Variable annuities, which allow you to invest in different securities and get payments based solely on how well your investments perform.
- Indexed annuities, which are similar to fixed annuities yet place your money into stock market investments.
No matter which type of annuities you choose, you have plenty of options. You can control different elements of your investment, whether it’s where your money is placed or how your payments are paid out as you increase your funds. It all depends on the terms of your annuities.
Annuities Give You Regular Payments
One of the biggest benefits of annuities will directly help seniors. When you invest in an annuity, you’ll get regular payments that can act as income during your retirement. That means you could have a steady, consistent cash flow even when you aren’t working, giving you freedom and flexibility.
Even the most basic annuities offer regular payments. Those payments can become supplemental income during retirement, or they can pay your monthly living expenses. Investing in an annuity is like creating a guaranteed income for the rest of your life – and you can even set the period of time.
Just keep in mind that the amount of each payment and the number of payments you receive will vary. It all depends on the type of annuities you have and the terms of your contract.
Your Money Will Be Able to Grow (Without Being Taxed)
Traditional retirement savings accounts, like 401(k) accounts and IRAs, have limitations. And investments come with taxes, especially as you’re growing your funds and making more money. Annuities, however, give you another option.
Annuities are tax-deferred. That means you don’t have to pay taxes on this type of investment, at least not while you’re adding money to it or getting earnings. You’ll only be taxed when you actually withdraw your money. And unlike 401(k)s or IRAs, there is no annual limit to how much you can invest into annuities. This is a beneficial perk for anyone who wants to keep investing aggressively.
Fixed Annuities Offer Guaranteed Rates of Return
Investing money involves taking a risk. No matter how safe or secure an investment promises to be, you’re still taking a risk of potentially losing money, should that investment not perform positively. But when you invest in an annuity, you’re taking less of a risk thanks to guaranteed rates of return.
Annuities – fixed annuities in particular – include guarantees. These guarantees are meant to protect against losing your money. They can include guarantees that you’ll make a certain percentage on your initial investment. Though these amounts are often low, they can give you piece of mind that you won’t lose all of your money.
The guaranteed rates of return make annuities particularly attractive for seniors. Older adults can invest their money without worrying about significant losses in a short period of time. It’s a more secure way to ensure you’ll have funds for retirement.
Death Benefits Are an Option
Another perk annuities offer that other investment cannot is the option to add on extra benefits and protections. Called riders, these extra benefits can offer you even more security – and you’ll have more peace of mind.
One rider you can add is a death benefit. This ensures your beneficiaries, or people of your choosing, can receive your money even if you pass away. When you opt for a death benefit rider, the insurance company will send your payments to your beneficiary if you die before the payout is complete.
This ensures that, whether you live a long time or a short time, the money you’ve invested will still go to use. It’ll be paid out to someone who can benefit from it, whether that’s you or one of your loved ones.
Consider Investing in Annuities for Your Retirement
If you’re looking for a way to secure your retirement income, annuities are a great option. These investments are more protected and more secure than traditional retirement investments, and they can offer unique benefits for older adults. And with an annuity, you can ensure that you’ll receive regular payments, just like a regular income.
To get started with annuities of your very own, search online. You can find insurance companies offering the kinds of annuities you’re interested in. And you can compare different annuities and options to make an informed decision.