Don’t Wait to Buy a Retirement Annuity

Interest rates have dropped recently due to overall market conditions as well as a number of rate cuts imposed by the federal government. These rate cuts affect mortgages, savings accounts and certificates of deposit – even annuities. You may be holding off on buying a retirement annuity, instead waiting for the rates to rise again. But you may be missing the point: a retirement annuity’s tax deferred properties and growth, based on compounded interest earnings, could result in your money growing faster than you may expect.

Money that is deposited in a savings account or CD earning a small amount of interest is usually kept that way for liquidity reasons. If you do not need that money anytime soon, that money could be considered underperforming. Along with miniscule interest earnings, you will be hit yearly with income taxes on those earnings. This further reduces your gains. With a retirement annuity, even a relatively small interest rate outperforms savings on CDs, because of the annuity’s tax deferred status. Your money stays in your annuity, continuing to grow tax deferred until withdrawal.

Buying a retirement annuity that offers a 4.00% return right now may not seem like a good deal, on the surface. But consider this – if you are currently earning 1.50% on your savings and you wait two years to purchase an annuity, you would have to earn at least 5.70% from your savings in years three through five, which would most likely be a difficult savings product to find, in order to match the account balance from the 4.00% annuity at the end of five years. But if you had bought the 4.00% retirement annuity when you first considered it, you could be in a much better position down the road.

There are no guarantees that interest rates will rise again in the near future - what goes down usually does come back up, but there are no predefined time limits as to how long interest rates will remain low. Wouldn’t you rather lock in a decent interest rate now with a retirement annuity? Call our Annuity Specialists at 1-877-519-8599 now to learn more about a retirement annuity.