A retirement income education should include an overview on annuities

An important part of any retirement income education is the consideration of annuities as a way to secure the investment portfolio with a fixed-income stream.

For years, the subject of ‘annuities’ has brought frowns and shaking heads because these products can be confusing; more so, and when the stock market was heading to the stratosphere, annuities were thought to be a lesser choice given the higher returns of the stock market.

But one can’t overlook the risk generally associated with the gamble for higher returns, particularly during the economic meltdown of the past few years; that’s reason enough to start thinking how best to protect your retirement funds while locking-in an income stream when you retire.

Two types of annuities that are common for an investor’s portfolio are the deferred and immediate annuity.

DEFERRED ANNUITY

This investment vehicle is set up for people who don’t need an income stream right away. The deferred annuity may work well if you happen to be years out from retirement; it can help in the balanced approach to building your portfolio.

Deferred annuities …do not make payments until later. You put money into a deferred annuity expecting to let it grow inside the contract for several years or more.”

‘Inside the contract’ refers to the multiple offerings the annuity company can offer the holder, such as certain types of mutual funds with a wide range of investment objectives: growth and income; international or growth, might be common choices for anyone wanting a ‘variable annuity.’

IMMEDIATE ANNUITY

As you near retirement, you might consider the benefits associated with this timely annuity investment. For one thing the annuity can start to make payments to your income stream ‘immediately,’ or at a time you choose following your retirement date.

“An immediate annuity makes income payments immediately, or very soon after purchase. You use an immediate annuity when you want to start taking income as soon as possible.”

Be sure to contact us to learn more about this very important tool that should play a crucial role in your retirement portfolio.

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