Invest in fixed annuities to have a relaxed retired life
By: Mike Anderson
Submitted: 2011-06-14 23:50:52 | Word Count: 545
Fixed annuities are a great source of income for the senior citizens in UK after their retirement. The best part about this is that it is a tax deferred annuity. You do not need to pay taxes for the amount till it is withdrawn. After withdrawal if the amount is taxable then you need to pay the taxes. Investing in fixed annuities is a great way of accumulating wealth for the future especially for old age. Old age brings with it numerous problems and most of the issues are related to finances. With a tax deferred annuity plan, life becomes secured and relaxed.
When we talk of tax deferred annuity, fixed annuities are the most common and the most sought after ones. It is probably the oldest and the most trusted form of annuity plans. In fixed annuities, the holder gets a fixed rate of investment return on the amount of investment contributions. This rate is decided in the first place while the investment is made. In majority of the tax deferred annuities, the rate of return remains permanent, but it might also change a bit over the long run. The time for which the investment is made is mostly for a long time and is decided in the agreement only. In that period, the investment grows almost at the rate of compound interest and is a tax deferred annuity.
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After the completion of the period, it is the time for the investor to get the returns. It has been seen that most of the fixed annuities are paid on a monthly basis as that helps in tax deduction. Taking the return amount one time in a lump sum might make it taxable. So it is wise to receive the payments in small installments preferably monthly so that you get the maximum return with minimal tax. The advantage in tax deferred annuity remains till the time the investment is not withdrawn. On withdrawal taxes are applicable.
Fixed annuities give you complete security after retirement. Since this is a tax deferred annuity, you do not have to worry about taxation and other complexities too. However, if possible take the returns of the fixed annuities on a monthly basis or quarterly basis as that will help in spreading the tax over some time, otherwise it might get concentrated and you will need to pay a large amount at one time. If you are confused with things, you might seek help of a financial advisor who will guide you through the idea of fixed annuities and a tax deferred annuity.
There are other advantages of investing in fixed annuities apart from them being tax deferred. A guaranteed source of income post retirement is the biggest advantage of investing in a tax deferred annuity. No other investment options provide such safe and guaranteed options. The death benefit feature is another important thing in fixed annuities especially in the tax deferred annuities. The holder of the annuity can authorize a beneficiary to receive any undistributed payments on his behalf. All these features have made fixed annuities so popular.
