Fixed Annuities Offer Numerous Options

An annuity may be either immediate or deferred. If income is important now consider an immediate annuity. Immediate annuities are usually purchased with a single premium and they provide income payments that begin immediately. The reason for buying an immediate annuity is to obtain immediate income and to make the insurance company the responsible money manager. The insurance company will assumed fiduciary responsibility for the income and will pay you on your selected time period.

If you are not yet ready for retirement, consider a deferred annuity. Deferred annuities provide income payments that can start many years later. Deferred annuities have an accumulation period, which is the time between when you pay premiums and when income payments start. The main advantage of a deferred annuity is to accumulate money on a tax-deferred basis, which can then provide an income at a later date.

A fixed annuity provides fixed dollar income payments backed by the guarantees in the contract. During the accumulation period of a fixed deferred annuity, your money earns interest rates set by the insurance company spelled out in the annuity contract. Most fixed annuities have a current interest rate and a minimum guaranteed interest rate. The company guarantees that it will pay no less than a minimum rate of interest. Many other contracts will offer a higher fully guaranteed interest rate for the entire length of the contract. You have numerous options in selecting the best annuity for you.

During the payout period, the amount of each income payment to you is generally set when the payments start and will not change. There are options available to the annuitant which can allow for changes based on outside circumstances. See your annuity contract for details of these options.

An equity linked indexed annuity is a type of fixed annuity, but its returns are based upon the performance of an equity market index, such as the Standard & Poor's 500 and the Dow Jones Industrial Average. New products are being released constantly with newer crediting choices and options. Equity linked indexed annuities offer safety and security while not tying your returns to the insurance company. The actual credited interest is set by the outside source.

Regardless of what the annuity offers it is important that the benefits match up to your needs and goals. Make certain you ask questions and it is always a good idea to obtain a second opinion.

Bill Broich helps seniors manage their retirement savings. Visit his website for more information: Free Annuity Booklet.

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Variable Annuities - Saving For Retirement While Keeping Your Options Open

If you're planning your investments for retirement, consider using variable annuities as part of your retirement program. Variable annuities offer the diversification so necessary for a truly safe retirement savings but also have some guarantees that may be perfect for your needs. Of course, like any good program, you don't necessarily make it the only investment you use for retirement. However, since each variable contains all the asset classes necessary for a balanced program, you'll find that variable annuities are suitable for a large portion of your retirement assets.

Variable annuities often contain mutual funds of all types and from a variety of companies. Some of the newer products also contain funds in various asset categories including sector funds. Sector funds are specialty funds that target special sector in the economy, such as technology or banking. Other mutual funds also contain specialty funds like gold or precious metals. You can tell that there's a broad selection from which to choose.

In today's economy, it's difficult to know whom to trust. It seems no matter how large the company, they accept a bailout check from the government. That's one advantage of a variable annuity. While the company that sells the variable should have a strong rating, the company doesn't invest the money in its general fund but with many different mutual fund companies.

The diversification of the companies that hold your assets is another benefit of a variable annuity not found in mutual funds. The chances you losing your assets if of any of these companies sink is small since both insurance companies and security companies have protection similar to the FDIC, but it does help you sleep better to know that you've didn't put all your eggs in one basket.

Variable annuities offer some guarantees that might be perfect for the person that wants an income from their policy. The guarantees for these people are the living benefits. Many of the companies offer the living benefits for an additional fraction of a percent of you account balance.

Some of the living benefits vary from a guaranteed return of your principal or higher, no matter what the market does or how your account fluctuates. Others guarantee that you'll always have a specific return, such as 5 to 7 percent, as long as you take a cash stream no larger than that percentage. If you pull out a lump sum, all guarantees of this type cancel.

The living benefits are perfect for specific situations. If, however, you're one of the lucky people that don't need to use any of the assets in retirement but simply want to pass the funds to heirs, there are death benefit guarantees to add to policies. Death benefit guarantees vary from a guaranteed return of principal to a guaranteed growth percentage per year. Like the living benefits, death benefit guarantees cost a percentage of your contract value on an annual basis.

As you can tell, variable annuities aren't simple contracts. In order to find the best one with the appropriate provisions for your situation, it's important to talk to an annuity specialist or seek information online. The selection is broad a varied, so don't sign up for the first policy you see. Take time to investigate this important asset. Variable annuities can be a huge benefit to your retirement years if you choose on that fits your situation.

Jonathan Tyler provides information and strategies for retirement. If you're interested to learn more about variable annuities or get annuity quotes without obligation, come see us.

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