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How an Annuity Can Help You Prepare for Retirement

If you’re a young and ambitious entrepreneur, retirement may not be something you think about all that much on a regular basis. But you should.


If you’re a young and ambitious person, retirement may not be something you think about all that much on a regular basis. But you should. Retirement can sneak up on you. When the time comes for you to stop working and start relaxing, you ought to be certain you can live comfortably. Don’t underestimate the importance of this!

Research indicates that people are retiring later than they used to. Though many factors may explain this trend, in general people aren’t retiring as early as they once did because they aren’t financially ready to. That doesn’t need to happen to you. Start preparing for the future now by exploring your options. For example, you might consider providing for your future financial security by opening up an annuity.

Keep in mind, the best way to determine how you should save for your future is to consult with an expert who will review the specifics of your situation and help you make the best choices. Consult a professional for financial advice.

That being said, it’s worth learning what an annuity is and why you might benefit from getting one. The following overview will cover what you need to know.

 

How an annuity works

Many common types of retirement funds and accounts (such as IRAs and 401(k)s) share a key limitation: When you begin withdrawing funds from them, there’s a chance you’ll outlive your savings. Now that humans are living longer, this is a genuine source of concern  if you’re trying to plan how to prepare for your retirement. You don’t want to reach old age without any money to support yourself.

This is what makes an annuity a useful tool. An annuity is designed so you may receive recurring payments when you’re ready to withdraw from it. It’s as if you were still collecting a paycheck even after you retired. For obvious reasons, you may regard this as an ideal way to achieve peace of mind in retirement. Reasons to deposit funds into an annuity include the following:

 

No annual contribution limits for an annuity

This is another way in which annuities stand out in comparison to other common types of retirement accounts. When you have an annuity, there’s no limit to how much you may contribute.

Thus, you can continue to build toward your retirement for as much as you wish. These annuities in particular offer a 3% interest rate. For every single dollar you contribute, you’ll receive 3% with no hidden fees.

 

Tax benefits of an annuity are big

The money you deposit into an annuity grows tax-deferred. This is among the top reasons to consider researching this option in greater detail.

 

An annuity is great for those in good health

With an annuity, as long as it’s separate from your IRA or a similar qualified retirement plan, you do not need to begin taking minimum distributions until you reach 72 years of age. This may make an annuity particularly appealing to someone who is healthy and has every reason to believe he or she will live to an advanced age.

An annuity can optimize your chances of receiving a regular and reliable income well into your elder years. As noted earlier, researchers have found that living longer has become increasingly common thanks to such factors as greater access to quality health care and an overall enhanced focus on well-being among younger people.

 

Planning for retirement

These are all points to keep in mind when you research your retirement plan options. Remember, this article isn’t intended to suggest you absolutely must choose to leverage the power of an annuity. It would be irresponsible not to look into this option more closely before deciding if it’s right for you.

However, it’s clear there are many reasons why you might decide to prepare for retirement with the help of an annuity.

 

Craig Lebrau is the CMO of Media Insider, a Wyoming-based PR company that aims to disrupt the way companies communicate their brand in the digital era.

 

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Photo: Pikselstock, YFS Magazine, Adobe Stock
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