Annuities for Retirement Planning
Post on: 16 Март, 2015 No Comment
Annuities are a type of insurance product, though they are often promoted as an investment.
When you buy an annuity, you are signing a contract with an insurance company that promises to pay you money over a period of time. Your payments may be immediate, which means they will start right away, or deferred, which means you will begin receiving payments at a later date. There are two kinds of annuities:
- Fixed annuities (FA). With a fixed annuity, you will get a fixed sum of money regularly (usually every month) for the rest of your life or a specific period of time.
Fixed annuities available through Union Plus allow you to convert a portion of your savings into guaranteed, steady income to help cover your living costs in retirement. Free of sales fees or commissions, these annuities can provide the most monthly income for every dollar you invest.
Advantages of FAs:
Consistency. The payment is guaranteed, and you can count on being paid every month.
Stability. Your income won’t depend on the stock market and its ups and downs.
Simplicity. You don’t have to study financial reports, monitor a portfolio, or buy and sell investments. Look for your monthly deposit into your checking/savings account each month.
Control. Your retirement money isn’t at risk in the markets, but is maintained in an account earmarked specifically for you.
Variable annuities can be complicated and carry high fees, so make sure you do your homework before purchasing one. Most experts recommend making the maximum contributions to such retirement accounts as IRAs or 401 (k)s before you purchase a variable annuity.
Variable annuity alert! Regulators are concerned that older investors are often persuaded to lock up their money in a VA for years, with steep surrender charges for early withdrawal. Variable annuities are not suitable for many retirees who cannot afford to lock up their money for a long time, according to a report by the North American Securities Administrators Association. Another concern is the hefty sales commission agents usually earn when they sell a VA. Some investors are also misled with claims of guaranteed returns, when in reality a VA’s return will fluctuate with the performance of its underlying investments.
The Union Plus Annuity Program does not offer a variable annuity product.
