What You Should Know First Before Buying Annuities

What You Should Know First Before Buying Annuities



What You Should Know First, Before Buying Annuities
Americans hear a​ lot about the shaky outlook for Social Security .​
In the future, the federal program likely will play a​ smaller overall role in​ Americans' retirement plans.
One way to​ fill in​ the gaps of​ a​ savings portfolio is​ to​ put money in​ annuities .​
With an​ annuity, you pay a​ premium in​ exchange for guaranteed income payments at​ regular intervals .​
It is​ most often used for retirement purposes.
The basic types of​ annuities are equity indexed, fixed rate and variable .​
The major advantage of​ annuities is​ that they all guarantee benefits such as​ tax-free growth, the ability to​ pass money directly to​ heirs or​ charities and an​ income stream for life .​
Over the past few years, equity-indexed annuities have gained a​ great deal of​ popularity .​
They offer interest or​ benefits that are linked to​ an​ external equity reference - a​ stock index like the S&P 500, for example .​
But you get a​ guaranteed minimum return in​ exchange for a​ limited maximum return; that is, you get less upside, but also less downside, to​ your stock-market investing .​
Your principal is​ never at​ risk .​
Fixed-rate annuities, on the other hand, guarantee an​ interest rate and a​ declared minimum .​
They have traditionally been the most popular annuities.
Variable annuities provide more options .​
They enable you to​ invest in​ stock, bonds, mutual funds and money-market instruments.
Reputable financial companies, like TrueYield Financial, want to​ make sure investors are comfortable when purchasing annuities .​
Here are some tips for the potential investor .​
* Be sure the firm you work with is​ not limited to​ offering just one company's annuities .​
There are many options available, so work with an​ agent that can get the one that best fits your needs.
* Understand what you are buying .​
Talk to​ your financial adviser or​ agent about which annuity may be right for your retirement portfolio .​
Fully understand the annuity contract you are considering .​
* Define your goals .​
Annuities can be used to​ accomplish a​ number of​ financial goals .​
For example, they can supplement your monthly income or​ provide emergency funds .​
Decide which purpose your annuity will serve .​
* Ask your agent if​ you have a​ free look period to​ review your annuity contract and make sure you have made the right decision.
* Investigate whether or​ not a​ bonus annuity is​ right for you .​
Bonus annuities credit premium bonuses to​ allow a​ retirement saver to​ make up for stock market loss or​ to​ provide an​ immediate boost to​ the account value.




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