Annuities guarantee what no other type of investment can. They’re unique in that you are guaranteed to receive paychecks monthly, quarterly, semi-annually, or annually at a certain point in the future. These payments can be for a select number of years, or be consistent throughout the rest of your life. But no matter the case, the best time to buy an annuity is now – however, your current age may influence the best type of annuity for you.
How Do Annuities Work?
Annuities can be summarized as immediate and deferred. Immediate annuities involve making one large premium payment and receiving payouts within a year, and deferred annuities entail multiple premium payments over a long period of time until the payments get disbursed years later.
Deferred annuities are more like long-term investments. You have control over how your investment grows, and can either be fixed or indexed. A fixed annuity grows with interest, but an indexed annuity is tied to a stock index and accumulates capital gains on top of interest. However, indexed annuities require a degree of risk tolerance, as it is more advantageous when the market is performing well.
Which Should I Choose If I’m Younger?
If you’re decades away from retirement, a deferred annuity is the annuity to purchase right now. An annuity may not have life-changing returns from year to year, but when you’re growing your investment over decades, you can potentially have enough income to last the rest of your life just from the gains alone.
However, this requires patience and self-control. Withdrawing before the payments begin will result in early withdrawal penalties and be subject to regular income taxes.
What If I’m Already Close To Retirement?
An immediate annuity may be the better option if you’re within striking distance of your retirement. Deferred annuities, while ideal in most cases, can be impractical for those who are significantly older.
This is still better than not buying an annuity at all. You’ll get more back than what you originally put in – however, it’s going to require a higher upfront payment since it’s a single premium. As an individual who needs a return on investment sooner than later, an immediate annuity is the one to buy right now.
Get Started Today
At Secure Insurance Group, we are devoted to helping you get the annuity that’s best for you. We will guide you through your options, so that you’ll be able to have guaranteed financial stability when you enter retirement. Call us today at 417-883-9300, or reach us on our toll-free line at 1-877-871-7328.