When Should I Consider Purchasing an Annuity?
Discover the best time to consider purchasing an annuity based on your personal needs, earning potential, and market expertise. Options are unlimited.
Financial needs change over the course of a lifetime. Early in your career, your earnings should fund investments. You may have a higher tolerance for risk and consider liquidity essential. As retirement approaches, a steady stream of investment income, insulated from market fluctuations, is the key for financial security. The options available when purchasing an annuity accommodate both types of investors.
Annuity Considerations
Market speculation produces the highest returns on investments. High rates of return include higher risk. New product development, discoveries and innovation tend to produce the most lucrative profit potential. Alternatively, you could wait for company earnings to accumulate steadily over years to build value in stocks and mutual funds. An annuity contract allows you to choose from no risk, low risk and high risk investments. The investment you elect determines your degree of risk and the amount of your future payments. As retirement approaches, you may change to fixed rate or low risk investment.
Tax Considerations
If you intend to speculate in the market using mutual funds, a tax-deferred annuity may not be your best choice. The primary benefit of electing tax-deferred status is the delay of income taxes. If you decide to move your account to a new company, the liquidation of an investment could produce a taxable event. You could destroy the primary benefit of a qualified contract. Non-qualified contracts do not increase tax liability when moved to another company. Taxes remain payable on the same basis as other investments.
Finding the Best Companies
The best companies are easily distinguishable by the level of service provided. They allow you to custom tailor an annuity based on your personal needs. They also provide useful tips and recommendations to insure your future payments remain adequate for a lifetime.
Related posts
- What is a Non-Qualified Annuity?
- How Can I Take Money from My Annuity?
- Are An Annuity And An IRA Identical?
- What Is The Difference Between A Mutual Fund And A Variable Deferred Annuity?
- What Is An Annuity Tax Shelter?
Leave a Reply
Send this page to a friend ...
