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Using annuities to supplement savings and investment

By Compuquotes Team on August 23rd, 2008

Annuity

Trying to build a nest egg to help you enjoy your retirement isn't always easy, and it's highly recommended that you maintain a diverse portfolio of savings plans and investments to ensure that you have enough money to live comfortably when you finally retire. While many people are familiar with traditional savings accounts and certificates of deposit as well as retirement funds and investment plans, annuities can also serve as a wonderful addition to a retirement plan. While they can be quite useful on their own, when added into an already diverse portfolio of savings and investment they can go a long way toward guaranteeing that you'll be able to afford whatever you would want to do with your retirement.

One of the benefits to including annuities as a supplement to your savings and investment portfolio is that you don't have to pay taxes on the gains that your annuities experience until you begin to withdraw from the annuity. If you allow your annuities to grow for a number of years then the amount that you'll save each year in taxes on the value of your annuities will more than make up for the amount that you'll have to pay when you finally do start to withdraw. The fact that you're adding money to your overall retirement savings while not paying taxes on it for all of those years can also make it a powerful tool in your retirement plan as the savings will also partially offset the taxes that you might pay on some of your other investments.

Because you can set up your annuities to pay out each month over time, the payments can serve as a supplemental income once you're no longer going in to work. Combine that with the money that you've amassed through your savings and investments and you shouldn't have to worry about financial problems after you retire. If you stagger the maturity dates of bonds and certificates of deposit you can further increase this effect by giving your savings a sizable boost on a regular basis while still having annuity payments come in every month.

One other thing that makes annuities very useful for retirement planning is that they can often be transferred as a part of your estate should you pass away before the balance of the annuity has been paid out. This means that you can have the annuity pay out to your spouse, your children, or just about anyone else of your choosing. By setting this up with your insurance company beforehand you can greatly reduce the stress on your family when it comes time for them to have to organize your estate.

Setting up an annuity to help supplement your retirement savings and investment plans is easy; all that you need to do is talk to your insurance agent and they can give you all of the information that you'll need in regards to setting the annuity up and making payments into it. You might want to take the time to shop around at different insurance companies in order to collect interest rate and investment option quotes before you start an annuity, of course, just to help make sure that you're going to be getting the most out of it that you can.

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