What is an Annuity?
Annuities are offered by insurance companies to help a person build upon their retirement income. An annuity invests a large amount of cash and will help a person get an income flow every month for the rest of their life. They can be used to increase income and supplement a savings account.
There are two main types of annuities:
- Immediate Annuity
- Deferred Annuity
There is the immediate annuity that is also referred to as income. There is also a deferred annuity a person could open. When opening an immediate annuity you will begin to receive monthly payments right away. A deferred annuity will also income to build up and can be paid out at a later time. The deferred annuity can be turned into an immediate annuity if you want to take your payout.
- Fixed Annuity
- Variable Annuity
An annuity can have be fixed or they can be variable. The fixed annuity will have a rate of return that will be guaranteed for a specific time period. This is similar to a certificate of deposit account. With a variable annuity a person can either gain or lose income. Fixed annuities are often selected by conservative investors. Variable annuities are for those that are willing to let their money sit for a period of time such as retirement. They often have other investments in addition to annuities.
The payout of the annuity will depend on the amount of money that was invested, how long it was left to sit, and several other factors. Also, the government recently approved new ways to invest. A specific amount of money can be moved from a 401K into an annuity. Further, the interest rates on annuities are higher than other accounts such as a certificate of deposit or a money market account. Now is a great time to invest in an annuity.
Be sure to contact Best Insurance Agency to talk about your options, answer any questions you may have, or show you how an annuity can help benefit your retirement. Contact us today!