WHAT IS AN ANNUITY?
Written by HMG Staff on 07/31/2018
In planning for financial security in retirement, an annuity cansatisfy two basic objectives:
1. To accumulate retirement assets on a tax-deferred basis: If you’re alreadycontributing the maximum to IRAs and any employer-sponsored retirement plans andneed to save more for retirement, a deferred annuity may be the answer to yourretirement savings need.
2. To convert retirement assets into an income that you cannot outlive: On theother hand, if you’re near or at retirement, an immediate income annuity can be used toconvert existing retirement assets into a lifetime income.
An annuity is a long-term savings plan that can be used to accumulate assets on a tax-deferred basis for retirement and/or to convert retirement assets into a stream ofincome.
While both are insurance contracts, an annuity is the opposite of life insurance:
– Life insurance provides financial protection against the risk of dying prematurely.
– An annuity provides financial protection against the risk of living too long and beingwithout income during retirement.
If you are already contributing the maximum to an IRA and/or anemployer-sponsored retirement plan, an annuity can be anexcellent way to save for financial security in retirement. If you’d like additional information on the rolean annuity might play in your retirement planning, CLICK HERE