Purchasing a retirement annuity might turn out to be the best option for you especially if you want to build a diverse investment portfolio. What's great about an annuity is that it allows you to vary your portfolio while ensuring a guaranteed return of investment. In addition, there is also less risk involved if you compare it to other investment options. But before you rush out to buy one, you need to know about the different types of annuities available and how they work; start by contacting a company like Puritan Financial Group. Each person's needs are different and knowing which among the different types of annuities can help you choose which one will work for you.
Buying a Retirement Annuity
When would be the best time to buy an annuity? Try to make your initial payment or lump-sum payment towards an annuity more than a decade before you expect to retire. This increases your chance of taking distributions without having to shell out 10% of its value in early withdrawal fees (or when you withdraw before you reach 59 1/2 years of age). Early withdrawal fees come with this kind of investment, as it was developed mainly to add to the income streams of the retiree and not the employee.
It is not the right time for you to buy an annuity if you have yet to maximize your contributions to your 401K, IRA or any other investment setting that is brought about by tax breaks. After maxing out your contributions to these venues, do you find yourself with extra money that you can put into your retirement savings? If so, then there is likelihood that the tax-free increase of money in your annuity will make sense if looked at from an ROI perspective. For example, when you retire, you will fall under a lower tax bracket in comparison to your bracket when you are employed. In this case, an annuity will be a good investment because you save a lot of money on taxes.
While guaranteed income for your retirement is certainly an advantage, you must remember that in an annuity, your money will be locked in for a number of years. If you want to be able to withdraw whenever you need to, then an annuity is not for you. For each withdrawal within the first seven years, you will be typically charged with a penalty of up to 10% of your investment. What's more, there are other fees involved. The initial commission alone can run up to 10% of your initial investment.
Purchasing a retirement annuity can be a complicated transaction for someone who does not know anything about the matter. It can be extremely beneficial only if you know what you are getting into. If you want to know more about retirement annuity, make sure to get the expert advice of an investment planner from companies like Puritan Financial Group.
Buying a Retirement Annuity
When would be the best time to buy an annuity? Try to make your initial payment or lump-sum payment towards an annuity more than a decade before you expect to retire. This increases your chance of taking distributions without having to shell out 10% of its value in early withdrawal fees (or when you withdraw before you reach 59 1/2 years of age). Early withdrawal fees come with this kind of investment, as it was developed mainly to add to the income streams of the retiree and not the employee.
It is not the right time for you to buy an annuity if you have yet to maximize your contributions to your 401K, IRA or any other investment setting that is brought about by tax breaks. After maxing out your contributions to these venues, do you find yourself with extra money that you can put into your retirement savings? If so, then there is likelihood that the tax-free increase of money in your annuity will make sense if looked at from an ROI perspective. For example, when you retire, you will fall under a lower tax bracket in comparison to your bracket when you are employed. In this case, an annuity will be a good investment because you save a lot of money on taxes.
While guaranteed income for your retirement is certainly an advantage, you must remember that in an annuity, your money will be locked in for a number of years. If you want to be able to withdraw whenever you need to, then an annuity is not for you. For each withdrawal within the first seven years, you will be typically charged with a penalty of up to 10% of your investment. What's more, there are other fees involved. The initial commission alone can run up to 10% of your initial investment.
Purchasing a retirement annuity can be a complicated transaction for someone who does not know anything about the matter. It can be extremely beneficial only if you know what you are getting into. If you want to know more about retirement annuity, make sure to get the expert advice of an investment planner from companies like Puritan Financial Group.
About the Author:
If you are on your peak years and are interested in low-risks strategies for your retirement, call Puritan Financial Group now! It's never too late to have senior life insurance at Puritan Financial Group.
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