Plan for a secured retirement life with deferred annuities
By: Mike Anderson
Submitted: 2011-06-06 22:44:47 | Word Count: 534
Deferred annuities are a great way of saving for your retirement. It is a long term investment that you can make so that you can have a tension-free, hassle-free and enjoyable retired life. Old age brings with it numerous problems related to health, finance etc. Investing in a fixed annuity or in deferred annuities can help you at the time of retirement to a great extent. Deferred annuities generally have two phases – one phase is when you make savings and invest them and the second phase is the retirement income phase.
For investing in a fixed annuity or in deferred annuities, you can invest one time by depositing a lump sum of money or you can do savings and invest them in small amounts over a period of time. The earlier you start saving and investing, the better it is for you. You will get higher returns if the amount invested is more and for a longer period of time. The insurance company that issues the fixed annuity or deferred annuities offer a fixed rate of interest for a fixed period of time on the amount invested. All these things come under the savings and investment phase.
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In the retirement income phase, you are at the liberty of choosing the mode in which you want your returns to come. While some people might want a lump sum return at once, there are others, who might want to take the money on a monthly, quarterly or half-yearly basis. Apart from these, there might be people who would only withdraw the money from deferred annuities in cases of emergencies or acute needs and requirements. However, you can receive these payments only for a fixed period of time. In a way, this is a guaranteed income for lifetime. This is the biggest advantage of investing in deferred annuities or in a fixed annuity.
There are two types of deferred annuities that are available – fixed deferred annuities and variable deferred annuities. This fixed annuity gives an interest rate that is guaranteed but for a fixed period of time. The income that you earn from such annuities remains tax deferred till the time you do not withdraw the money. On withdrawal, the amount might be taxable. For fixed deferred annuities, choose a reliable and an established insurance company. Since this is an investment plan for a long time, you must ensure that the company will exist for that long. Consider this factor strongly before investing in a fixed annuity.
If you are looking for an investment plan that offers you investment choice and flexibility you can opt for a variable deferred annuity. You can opt for a wide range of stock and bond investment choices in variable deferred annuities. Though they provide higher rates and higher returns than normal investments, there is no guarantee and assurance to the thing. However, in this case too the income remains barred from taxes till the time you do not withdraw the money. It will only be taxable after total withdrawal.
