Could securing a stable income for life be as simple as understanding annuities? If the thought of tax deferral and safeguarding your principal has ever crossed your mind, this is the conversation for you. We’re not holding back as we address the biggest concerns you might have, from the fear of losing control of your funds to the possibility of not living long enough to reap the benefits.
For retirees, the most attractive feature of fixed annuities is the assurance that it will provide a fixed income for life. But all investments have their good and bad points; and fixed annuities are no different. Let’s overview some of their advantages and disadvantages summarized in the table.
For retirees, the most attractive feature of fixed annuities is the assurance that it will provide a fixed income for life. But all investments have their good and bad points; and fixed annuities are no different. Let’s overview some of their advantages and disadvantages summarized in the table.
If you are 70 and living off your income from a Certificate of Deposit (CD) you may find it more advantageous to switch to a laddered set of annuities for more income. Let’s consider how.
While fixed annuities provide both safety and tax deferred interest accrual for millions of retirement savers, the annuity owners cannot avoid taxation indefinitely. This is perhaps their chief disadvantage, as all interest income that is distributed from an annuity is taxed at the annuity owner’s top marginal tax bracket.
While fixed annuities provide both safety and tax deferred interest accrual for millions of retirement savers, the annuity owners cannot avoid taxation indefinitely. This is perhaps their chief disadvantage, as all interest income that is distributed from an annuity is taxed at the annuity owner’s top marginal tax bracket.
When you purchase a deferred annuity all taxes on its earnings are tax-deferred. If you don’t need your deferred annuity, you can leave it for your beneficiary upon your death. Unless the beneficiary is your spouse, he’ll have the option of cashing it some time within a 5 year period, or taking if over his remaining life expectancy. But he’ll have to pay tax on the earnings at his income tax rate.
