Wouldn’t it be nice if you could continue receiving a steady stream of income even during your retirement? Well, with an annuity you can. An annuity is an investment agreement in which you pay an insurance company a specified amount of money and the insurer invests it for you with the promise to pay you back on a future date or series of dates. You can choose to receive your annuity income monthly, quarterly, annually or in a single, one-time payment. Like an IRA or 401(k), your withdrawals are taxed at your regular income tax rate, and unlike an IRA or 401(k), there is no annual contribution limit for an annuity.
You have two options for how your annuity is created:
There are three ways in which you can choose how your annuity earns a return:
Annuities can sound like they are great moneymakers, but be aware that there are high fees and limitations to the earning potential associated with this kind of investment. You can learn more by meeting with an insurance agent or qualified financial planner.