Is the word retirement still in your vocabulary? If you are in the pool of people expecting career cessation, you spend time understanding how to finance this significant part of life. Primarily used as an interest-bearing asset, annuities provide a fixed amount of monthly income to the asset holder after a certain number of years. The interest on the capital investment compounds, having the effect of multiplying your equity annually.
Scheduled Cash Disbursements
A monthly allowance that doubles as an insurance product? Yes, it is legitimate. In exchange for a lump-sum payment, or sometimes monthly payments, a guaranteed rate of return accumulates on multi-year guaranteed annuities (MYGA) for a preset number of years. Once the locked period passes, the holder has the option to lock in again at the guaranteed rate.
Unlike some financial instruments, annuities are typically tax-deferred. This means that payments to the IRS will be required at the time of withdrawal instead of the time of deposit. This is beneficial in the long run because you do not need to pay today’s income tax rates. If you anticipate future tax rates to be lower, you can see tangible savings on your fulfillment date.
For those who are anticipating a partial or full retirement, the MYGA instrument is an attractive purchase. The benefits of guaranteed interest rates and tax deferment could mean profitability in your future.