Longer Lives can be funded with Annuities
The good news is that life expectancies for men and women in the United States are higher than ever. Better healthcare and an increased focus on healthy living are leading Americans to live longer, healthier and more active lives. The bad news is that Americans need to find alternate ways to financially support themselves for this longer life. Traditional pension programs are disappearing, and surviving on Social Security alone is not feasible for most people. Forward-thinking individuals have saved using retirement tools like 401ks, 403bs and IRAs. For those who have already maximized their savings with these tax deferred tools, there is another option for saving in a tax-deferred way: annuities.
Annuities are similar to other tax-preferred savings methods in that taxes are not due on annuity gains until the annuity holder elects a payout option or makes a withdrawal. This means that the original deposit and any interest earnings can grow, tax deferred, for years. When considering an annuity, consumers should clarify their savings goals. Looking for a way to save money over a longer period of time – more than a year? If so, then a deferred annuity may be the best option. There are several different types of deferred annuities: traditional fixed, multi-year guarantee, variable and fixed-indexed. The difference between these annuities is the way the interest is calculated. For example, multi-year guarantee annuities pay a set rate over a set term, typically five years or more. Whereas fixed-index annuities rely on the performance of a particular stock market index, such as the S&P 500, to calculate its return rate yearly. The interest rate earned can be higher or lower from year to year, but unlike the stock market index itself, a fixed-indexed annuity always earns a minimum interest rate.
An immediate annuity is best for monthly income that can be guaranteed for life. In return for a lump sum, the issuing company structures a set of payments that the immediate annuity holder cannot outlive. Even if you outlive the original amount of the deposit, you will continue to receive payments until death.
The numerous informational web pages at FixedAnnuityDirect.com give an excellent overview of annuities and the various options available. For those who have more questions, Annuity Specialists are available Monday through Friday, 8:00 a.m. – 5:00 p.m., Pacific Standard Time at 1-877-519-8599.