Fixed Index Annuity Pros and Cons
Most of us are planning strategic ways to increase our income for our time of retirement. There are various ways to do this and the best ways are to not put all our eggs into one basket. With that said, you should learn the things you need to know about a fixed annuity. For starters, this is really a contract between yourself and an insurance company of your choice. This insurance company will pay you a guaranteed fixed income for the decided term. Usually, the term of the contract is until the death These are Fixed Index Annuity Pros and Cons .
It is a wonderful way to provide financial freedom in one’s golden years. How better to live your life than having an income that is guaranteed for years. This agreement between the insurance company and yourself requires a specified investment on your part which the insurer will hold, and later on will repay you with interest.
It is tax free up to the point of withdrawal with the deferred fixed annuity. The contract drawn up by the insurer will stipulate the terms of the amount invested and repayment, and the length of time in between where you are not permitted to withdraw any of the funds. This period could be anywhere from up to 10 years, and even more sometimes.
This lump sum investment, as is usually the case is made at the signing of the contract. You will also have to consider the terms of repayment of the amount, along with interest. The capital amount will not be allowed to be touched once repayment begins. This is key as large surrender charges will have some impact when you go to sell annuity proceeds.
Pensions, either government or private are usually not enough to sustain our lifestyles and that is why it is important to plan your future properly. Your golden years should be full of opportunities that were missed due to life’s responsibilities. But with proper investments such as this, you could enjoy those worry-free, knowing that you have the funds to do so.
Are you currently weighing your options for retirement savings? Are you looking for a secure, low risk source of retirement income? If so, then you should consider a fixed annuity as a safe, predictable investment that will pay off over time after retirement.
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An annuity is an investment-based income source where you receive regular payments on a yearly or quarterly basis. With a fixed annuity you will always receive the same payments, so they are much safer than the variable annuity where your payoff fluctuates with your investment earnings.
Most people who go with a fixed annuity want a safe, secure way to save for retirement. They do not want to deal with the fluctuating market and payments that come with the variable annuity.
For those who want a secure income stream that will not have that level of risk, the fixed annuity is a good option.
For anyone who will be depending exclusively on this one retirement fund for income in their later years, the fixed annuity is a much safer way to go.
Saving for retirement, or protecting a nest egg,requires a solid plan. The challenge is ensuring a
competitive credited interest rate over time while protecting principal and previously earned interest.
Investment alternatives may offer the potential for higher returns but also include the risks of market volatility and potential loss of principal. Some traditional financial options only offer a fixed credited interest rate and do not provide the potential additional credited interest than an FIA provides. Ultimately, this could result in a smaller nest egg than originally sought. Tax-deferred accumulation and compounding of interest are important benefits that can grow your nest egg. And you get added flexibility with penalty-free withdrawals ,straightforward and safe,
The index-linked interest that is credited to you will never be less than 0%. This means a downturn in the
market index cannot decrease your account value. !!!
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