Annuities make it very easy to build retirement income streams as they allow for accumulated assets to grow without getting taxed on that growth prior to making a withdrawal. A popular option among pre-retirees and those already in retirement, annuities are contracts that promise to make periodic payments to the investor for an established amount of time and at a particular rate of interest. This level of predictability helps calm fears of market volatility. However, the amount of those return payments ultimately depend on the amount of the initial investments, the type of annuity chosen, the length of time that has passed, and the performance of the market.

Sold or backed by an insurance company, there are various types of annuities that exist and all with slight variations that may or may not appeal to each investor, depending on his aversion to risk. Fixed annuities for example, offer a predetermined rate of return offering greater predictability and a sense of certainty, of say 3% per year – which is not taxed until the distribution of those monies. This may be lower than the market growth over several years, but it is enough to keep pace with inflation, and it provides the average investor an opportunity for moderate income growth that is tax free. Further, these annuities can deliver a higher rate of return to their owners when compared against the rates of CDs or similar savings vehicles and protect the investment from yearly taxation.

With annuities, the investor can get his funds back when he retires in a percentage that is entirely based on his discretion and on his fluctuating needs from year to year. Further, he can either elect to be paid out all at once in one lump sum or in installments for period of time, say 10 to 30 years. For example, an investor can, at the age of 65, decided that he will withdrawal 7% a year for the next 25 years from his account. The longer the investor waits to make good on those withdraws, the more percentage or amount he would be able to take each month.

Building retirement income through various annuity accounts can create periodic paychecks that the investor knows will be there for a particular time period. A portfolio with several annuity accounts can all have various distribution or pay days that can supplement other investments the investor has made. With the predictable fluctuations in the market, fixed annuities generate the attention of conservative and frugal investors who would like to foresee a steady and dependable rate of return.

Unlike some other saving vehicles, some annuities allow for added security when the investor dies, as the remaining payments can be passed to a beneficiary. Annuities are backed by gathering the money from many investors into a pool and delivering payouts from that pool. Due to their structure, they offer a more safe return on their initial investment and are particularly beneficial to those retired or near-retirement, as they have less room for wide market fluctuations. When the stock volatility displays itself, as it often does from time to time, those investors who have place some of their earnings in fixed annuities will maintain a steady stream of income and negate much of the financial losses that traditional stocks may experience.

Annuities provide a wide array of investment and retirement planning solutions for all investors, both big and small. Owning annuities, investors can deliver key investment benefits, including the opportunity for predictable investment growth and deferring taxes. An annuity is a contract that is purchased between an investor and an insurance company. If an investor would like an immediate income or deferred income stream, an annuity presents immediate advantages. Various annuities exist to provide a mix of unique characteristics that may be appealing to different investors, including the ability to choose the level of risk, specific deferred tax benefits, and predictable income streams.

Recognized as “tax deferred” saving instruments, annuities can provide the investor the option of depositing money or purchasing the account and receiving tax free growth every year until the funds in the annuity account are withdrawn. This allows the individual to safely put away his money in a growing account until he or she is ready to make that withdrawal at a future date – all without receiving a 1099 form for the year.
In addition, annuities are flexible for investors, as they can be purchased with either money (after-tax dollars or not). Either way, the tax obligation would not have to be paid until a later date which might place the investor in a different tax-bracket altogether. Thus, careful planning would allow the investor to reduce his or her tax burden and further grow money in a tax free account – all at his discretion, and would serve as tremendous benefit.

There are several types of annuities to choose from that all have specific benefits for the investor. A “fixed” annuity, for example, can provide an investor the ability to deposit his money in an account that steadily grows at, say 3% a year. The growth may not be as dramatic as other funds, but this allows the investor to safely plan his or her income, despite what the market may be doing now or in the future. As other option, variable annuities provide the investor with incredible flexibility to invest in any number of mutual funds within one annuity. The investor can give a particular weight to each mutual fund or fixed fund in accordance with his or her own aversion to risk. So for example, if an investor would like to invest in higher risk international funds but maintain a balance in his annuity, he may also be able to invest in “fixed” funds in the same annuity. Variable annuities also provide and allow for a beneficiary to be named in the account. In case of the investor’s death, a beneficiary would be able to claim unpaid purchased on the account before the money is withdrawn. Index funds, on the other hand, allow the investor to tie his annuities growth to that of the market’s level of growth.

The primary benefit if annuities can be a deferred tax benefit that is only taxed on the growth of the account. This provides the investor with an excellent opportunity to invest his or her funds without the burden of taxation every year. In addition, the investor would also be able to determine his level of risk and thus, potential growth that he chooses to establish for himself. A secondary benefit is that an annuity income can be claimed either immediately or at a later date, which is all dependent on the investor’s personal financial situation.

Life insurance and annuities are fundamental investment vehicles that exist for the investor and his or her family. Both provide a level of security either in case of death or retirement (not that those two are similar events), and thus, would add to the depth and diversity of one’s investment portfolio. Various forms of life insurance can be purchased for future payment in the case of accidental death or illness; in addition several annuities exist for the investor.

There are several categories of life insurance payment, including whole life, universal life and variable life insurance policies which can be purchased. For example, term life insurance can provide a benefit in case of death and illness and exist for a specific period of time, but does not accumulate cash value. With term life insurance, the party or parties that are involved with policy need to be aware of the “face amount” or the protection or death benefit the policy gives. In addition, the policy should know how much would be paid out (otherwise known as premiums), and how much would be paid in case of death. Life insurance ultimately provides a level of security for a loved in case of extreme illness, or death by providing funds that could replace future earnings, debts, or funeral and medical expenses.

Annuities, on the other hand, are also contracts between the purchaser and an insurance company, but they are used in an entirely different way – for income streams that is accepted immediately or deferred for a later date. The funds in those accounts are allowed to grow and accumulate assets without a visit from the tax man every year. This tax deferred growth can be an aggressive approach to prepare for retirement and significantly grow funds. The ability to place money in an annuity provides a safe place for investors to accumulate a significant cash value for that investment and a future payout after turning 59.5 years of age or older. Generally, life insurance policies do not accumulate a cash value at the end of their term.

An investor can purchase any variety of annuity contracts for a future pay out, during which time he will have to pay the taxed on the growth of those tax deferred accounts. The contract purchased would depend on several factors that may benefit the investor, including his or her, the amount purchased, the type of risk or growth being sought. Annuities are also contracts that are allowed to grow with not tax obligation until the first withdrawal is made. . Annuities in general allow for a predictable stream of income through a specific period of time. Variable annuities fall into a general category of annuities with others offering varying features for the investor. Fixed and indexed annuities also exist.

Annuities are contracts purchased for the promise of a future payment and are usually backed by insurance companies. Each type of annuity has its own positive characteristics and features that may or may not appeal to an investor. Variable annuities offer a unique feature from the others, which allow the investor to choose a beneficiary for their account in the unfortunate possibility that they may die before collecting any benefits.Both annuities and life insurance are essential to anyone’s portfolio to protect one’s family in case of death or prepare for retirement.

Annuities have earned the position of being a stable investment option for an investor’s diverse portfolio because they have consistently provided enormous money growth and tax benefits. As with any investment, there may be some “pros” and “cons” that may generate the perception of them as “good” or “bad” options. Yet despite those perceptions, annuities can provide clear and sound investment option that are suitable to the needs of a variety of investors of all ages and investment needs.

Annuities have certain characteristics that may be appealing to an investor. Whether they are a good or bad investment choice, lies in the investor knowing and understanding what his or her immediate and future needs are, and what options he can utilize to meet those needs. Annuities are investment contracts that are purchased by an investor from an insurance company, usually in exchange for future payment.

There are several types of annuities that are offered and which make a substantial contribution to an investor’s portfolio. The primary benefit of annuity is that a purchaser can continue to invest in the account, while deferring taxes on the growth for years until he makes his first withdrawal. This allows his purchased funds to grow for years without being taxed. Further, an annuity can provide a stable, steady, and predictable income stream for either a predetermined amount of time – say, for twenty years or for the rest of the investor’s life. Purchasing an annuity can therefore deliver an immediate or deferred payout, whichever is most beneficial for the investor. Keep in mind, the longer the annuity is deferred, the greater amount of the periodic income stream will be.

Since annuities are purchased contracts between insurance companies, and not a traditional banking institution, an investor is not covered under the traditional FDIC protections like other traditional banking accounts are. Investors are therefore investing in the soundness of the insurance company issuing the annuity. Yet the industry offers investors some level of stability and relief by setting the precedence of other insurance companies buying up the contracts of the company that is headed for bankruptcy. In addition, nearly all states have created groups or associations to protect the investor in case an insurance company goes bankrupt.

It is always prudent for the investor to maintain updates on the health and solvency in the institution that is holding his money. Reading the quarterly reports, statements, and annual prospectus can help keep an investor grounded. If the company in question may not be as healthy or is not offering the service an investor would want, the investor can often switch annuity companies and incur not tax charge. There may however, be a modest transfer fee from the company holding the annuity.

Since annuities provide tax free growth until the investor withdraws funds from this account, they will deliver a penalty for early withdraws. This means that unless you are 59.5 years old, you will get penalized from making a withdrawal on the investment. Therefore, once opened, the liquidity of the account remains dependent on the investor’s age. Annuities can offer a variety number of options with either a fixed rate, variable, or indexed funds. These allow for strategic investment planning based on any number of given factors such as age, financial needs, and risk aversion.

Deciding between investing in an immediate annuity and a deferred annuity depends on the goals of the investor and his or her age. Annuities are contract investment vehicles between an investor and an insurance company that provides a stream of income immediately or at a later date. Annuities, in general can allow the investor a safe place deposit his money. Those deposits can grow without the burden of paying taxes on that growth until the withdrawal is made.

Annuities allow the investor to withdrawal any monies deposited without sustaining a penalty if they are above the age of 59.5 years old. Money vested in an immediate annuity, can therefore be withdrawn, say on a monthly or periodic basis, chosen by the investor. The amount of the withdrawal is also at the discretion of the investor, given his or her needs.

A deferred annuity is an investment contract which allows the investor to make purchases on a future stream of income and which grows at a particular amount each year. The investor is able “defer” his tax payment for a later date in the future. For example, a “fixed” deferred annuity would be able to grow at 3% every year. If the annuity is purchased with after taxed dollars, then the only amount that is eventually taxed is only on the rate of growth after the initial withdrawal.

Both immediate and deferred annuities can be placed in various sub groups depending on the aversion to risk by the investor. For example, a deferred annuity can be vested in a variable annuity, which would allow the investor the ability to make investments in any number of mutual funds that the particular insurance company makes available. For example, one particular insurance company may specialize in offering “socially responsible” mutual funds – or other funds that adhere to specific criteria for socially responsible investments, such as fair trade or non-military investments. Other mutual funds that may be offered are higher risk international funds. Variable annuities allow the investor to choose the kind of investments and the weight (or the percentage of those investments) determined by his or her level of financial risk.

For example, in a variable annuity, the investor might be able invest 25% of his funds purchases in a high risk international fund, another 40% in a commodity fund, and the rest in a “fixed” rate fund. The rate of growth for each annuity obviously depends on how each of the market segments does. That growth can “defer” taxes until the investor makes his first withdrawal. Another immediate or deferred annuity can be “indexed” annuities, which are instruments which can be specifically linked or pegged to the growth of the market.

The language of the contract can be pre-determined to change from a “deferred” annuity to an “immediate” annuity after some time as passed. Once the change of language is made, the contract begins to deliver an immediate stream of income for the investor. The investor will only pay taxes on the growth of that investment at the time of the withdrawal. Both deferred and immediate annuities pose particular benefits for the investor. Ultimately, making the decision of having an immediate or deferred annuity should should be based on the age of the investor and the immediate and long term financial goals.