When you’re planning for your retirement, you want to make sure that you’re going to be guaranteed an income stream once you retire. An annuity can help you accomplish that guaranteed stream of income.

If you are considering purchasing an annuity, here are some tips you should be familiar with:

  • An annuity is a financial product that is sold by an insurance company. It allows you to make payments into it and your investment will continue to grow, tax-free. You control the timetable for when your future payment stream will begin.
  • Your payments from your annuity are taxed as ordinary income, so they don’t fall under capital gains for income purposes. There is no limit to the amount of money that you can put into an annuity, unlike an IRA.
  • When an insurance company claims that their annuities provide an income stream that you cannot outlive, this is often true. Annuity customers are pooled. When young members pass away, whatever funds are left after settling payment obligations to their heirs continue to subsidize benefits and income streams to other annuity holders.
  • When choosing between fixed or variable type annuities, you need to be aware of how each type works. With a fixed annuity, you’ll receive a fixed series of payments according to the conditions specified in your agreement with the insurer who will control how the funds are invested. A variable annuity allows you more control in how your annuity funds are invested, while you still receive the deferred tax benefit and other safety features of an annuity.

Annuities are not simple. This is why you need expert advice to know what types are best suited for your personal retirement needs. Let us help you with choosing the right annuity to meet your goals for retirement income.