Deferred Annuities

By Compuquotes Team on July 7th, 2008


Annuities are retirement savings plans in their most simple explanation. The goal of any annuity is to give you a steady income flow when you've retired. Deferred annuities are different from immediate annuities - deferred annuities have two parts - savings and investment, then payout. Immediate annuities are a single lump sum investment and then it begins paying out immediately.

Deferred annuities (as well as immediate) come in two types - variable and fixed. Variable annuities offer capabilities for greater returns, but at added risk. If the variable annuity's investments don't deliver the anticipated rate of growth, you can lose money. Fixed annuities are much more secure, remaining the same even if the market doesn't perform as well as it was expected to. There's a third choice as well, a combined fixed and variable annuity that gives you greater income each month while maintaining capabilities for more growth.

Perhaps the greatest benefit of a deferred annuity is tax deferral. The money that you invest in an annuity during investment is not taxed, which means your investment grows faster. The annuity payments are subject to income tax, and if you withdraw money from the annuity before you are 59 and a half years old, you will also be subject to an extra 10 per cent tax penalty.

Variable deferred annuities also have a guaranteed death benefit that guarantees that the beneficiaries will receive nothing less that the original amount you had saved/invested in your annuity, minus any payments you have already collected. There is also the potential that the death benefit will increase as the market does well. Many of the insurance companies that offer annuities will offer an increasing death benefit as the market performs in your favor.

The obvious benefits of purchasing an annuity are stability, security and savings in time and money. When you've finished the 'saving phase' of a deferred annuity, you've guaranteed future income for your retirement years, whether that is for a period of time that you agreed to or for the rest of your life, with the remaining amount going to your beneficiaries. Deferred annuities save you time managing your savings account for your retirement and you don't have to pay any broker and transaction charges that most other retirement savings programs are rife with.

Additionally, your deferred annuity is guaranteed by the insurance company, which keeps it safe from fluctuating markets, natural disasters and a host of other worries that plague other retirement plan investors. A deferred annuity means you will never have to worry about money for your retirement again. Flexibility with deferred annuities means that you can find the right deferred annuity to fit your life and situation. Talk to an insurance agent or broker about deferred annuities to find out how you can safely and securely start saving for your retirement today. This amazing product is one of the best ways to secure your golden years without financial worries so that you can enjoy yourself now without worrying about the future, and enjoy your future to its fullest.

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