What Is An Annuity? - Annuities Explained

An annuity is a contract whereby for a fee you can be guaranteed an income for the entirety of your retired life

. The regular income from an annuity can offer you security for once you retire. The income you could possibly receive from an annuity can have an effect for the rest of your life so ensure you seek professional advice before entering into a contract.

How could you benefit from an annuity?

The income can provide security and stability for you and your family when you're retired

The level of any annuities you take may be chosen by yourself (monthly, quarterly)

Spousal benefits are one option that'll be available to you

What sort of annuities are available ?

There are three different types of annuities available, these are:

Fixed Annuities

Variable Annuities

Indexed Annuities

Fixed Annuities

The low risk option that locks in a certain return for a given amount of time. A fixed annuity is the simplest type of annuity and is perfect for someone who wants a specific, fixed amount of income in retirement.

Variable Annuities

With a variable annuity the premiums are paid into a portfolio of investments. Obviously this type of annuity carries more risk and the payouts depend on the success of the investments and market performance. Whilst the risk value is higher with these kinds of annuities it also is the reason why the returns could be greater. They are often picked by younger investors or people who like a little risk in their lives!

Indexed Annuities

An indexed annuity will provide a return linked to a financial market index.

With the different types of annuity available all offering different returns, it can be a complicated subject for people to make sense of, in order to decide if:

They want an annuity

Which kind of annuity to choose

A financial consultant should be able to help you review your personal circumstances and help you to decide the type of annuities are best suited for you. It is crucial that you way up the benefits of each of the annuities options carefully to make sure you will be happy with your decision. After you have made your decision to purchase annuities it can be hard to back out of.

Retirement should be a stress free and happy period in your life and if you choose your annuities wisely this could be entirely feasible.

What Is An Annuity? - Annuities Explained

By: Robert Deans

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