A tax-deferred fixed annuity is an efficient retirement plan that can protect your assets’ values while allowing its value to continue increasing. Similar to a certificate of deposit, a tax-deferred fixed annuity guarantees you a multitude of beneficial guarantees. They include:
– Return of your principal
– Return on your principal
– Defers tax liability until cash is withdrawn
– Lifetime income
– Guaranteed principal
– Guaranteed interest
– Avoids high costs and delays of probate
It’s not only about the guarantees that make this plan alluring to many retirees. It’s also about what you earn over the years. By accruing interest on your principal, your assets are not only secure but growing as your approach your retirement. By compounding your interest, you are essentially adding value atop your already valuable base investment.
Remember, no annuity is built to satisfy the desires of every person and income bracket. Usually, a tax-deferred fixed annuity is best for those able to invest $10,000 or more, but that varies with the product and plan you opt for. Be prepared to make the investment in one swoop as most of these ventures require a one-time investment rather than an incremental approach. In doing so, you have locked in your investment. From there, your account’s value grows over time at a guaranteed rate.
Be sure to check your state laws before making the investment. Depending on which state you live in, your situation could vary to a degree. A multitude of variables including proceeds from state inheritance taxes, medical needs withdrawals and account value protection can alter from state to state.
As is the case with any retirement plan, disadvantages can arise. If a beneficiary receives your investment, they will ultimately be taxed in a higher tax bracket. Remember that all income gets taxed as if it is your standard income. Again, depending on the state you reside in, premium taxes could devalue the amount on future payments.
That’s why you always need to consult with an annuities expert before taking the plunge on any investment. Your future depends on this decision, and your life’s work deserves to be protected. By making the sound choice, be it a tax-deferred fixed annuity or otherwise, you position yourself to have the most enjoyable retirement possible. You’ve put in the hard work your whole life. Now it’s time to make the right choice.