subject: Types Of Annuities: Deferred Annuity, Pension Annuity, And Retirement Annuity [print this page] There are all sorts of annuities available, meaning it can be hard to understand what they offer. Some of the more common annuities are a deferred annuity, a pension annuity, and a retirement annuity. Understanding the differences as well as the advantages or disadvantages is important if you are thinking about purchasing one of these annuities.
A deferred annuity means that it enjoys tax deferral, with no income tax requirement until the money is withdrawn. Because of this, a deferred annuity has many advantages or other investments such as CDs, mutual funds, and security oriented long-term investments. Investing money into a deferred annuity rather than in taxes over an extended period is obviously an advantage.
A deferred annuity can be an important tool for retirement planning. A deferred annuity allows the value of an annuity to increase. A deferred annuity can be purchased in periodic, systematic, or a lump sum payment.
When someone is ready to convert the money built up in their pension into a regular stream of income, one of the most popular ways to do so is through a pension annuity. This provides a way for you to receive regular income during retirement. There are considerations about pension annuity options that are important to understand.
A pension annuity is a long-term commitment, meaning you cant go back and ask for a refund. There are also different types of pension annuity with different rates, depending on various factors. The most conventional type of pension annuity is a standard annuity, which pays a fixed income throughout the remainder of your life.
Like a pension annuity, a retirement annuity can provide dependable security for the rest of your life, or for a period you select. Once you are ready to stop working, a retirement annuity is a good place to put a lump sum of money from your retirement savings or other source of income. Purchasing a retirement annuity involves a one-time payment.
Distributions from a retirement annuity typically start a month later, with fixed or variable options. Income payments from a fixed retirement annuity will never change, meaning they are safest. Fixed retirement annuity payments are based on the amount of your deposit as well as your age, gender, and interest rates at the time of purchase.
Whether you are considering a deferred annuity, pension annuity, or retirement annuity, it is very important to get sound financial advice. This will help ensure you get financial peace of mind when you need it most.
