Plan Medicare offers a variety of insurance & financial planning for our clients. One of our most popular insurance products is annuities. Here is everything you need to know about annuities and why investing in an annuity plan is a great form of retirement planning.

WHAT IS AN ANNUITY? An annuity is an insurance product that pays out a steady flow of income, over the course of time. Annuities are often used as part of a retirement planning strategy and are popular among people who want to receive a guaranteed stream of income for the rest of their lives.

HOW DO ANNUITIES WORK? When you make an investment in the annuity, you set it automatic payments for your self, or series of payments, starting whenever you choose.  The income you receive from an annuity can be doled out monthly, quarterly, annually or even in a lump sum payment. Payment sizes are determined by numerous factors including, the desired length of your payment period and overall investment amount.

WHAT ARE THE DIFFERENT TYPES OF ANNUITIES? You can opt for an immediate annuity, which will begin payouts right after our initial investment. For those who may not need the income immediately, a deferred annuity will accumulate money while the immediate pays out. You can always convert a deferred annuity to an immediate annuity should you decide you need the money sooner. Annuities are either fixed or variable. Fixed annuities are guaranteed payouts for the rest of your life, or a set number of years and do not require you to choose your investments because the insurance company handles choosing for you. These are less volatile than variable annuities which are run on a payout stream that is determined by the performance of your annuity’s underlying investment, which you choose. Variable annuities tend to have higher annual expenses.

WHAT ARE THE ADVANTAGES OF AN ANNUITY? There are tax benefits to annuities. Money that you invest in an annuity will grow tax-deferred and when you eventually make withdrawals, the original amount you contributed to your annuity will not be taxed. But earnings are taxed at your regular income rate. This will allow you to save money while you are still working and defer paying taxes on it.  In addition, unlike other tax-deffered retirement accounts like IRAs and 401(k)s, there is no annual contribution limit for an annuity which allows people to store as much money as they want away for retirement.

IS AN ANNUITY RIGHT FOR ME? Annuities are great retirement planning tools for those who are looking for an alternative to bank CDs. Investing in an annuity gives you peace of mind that you will have a steady stream of income once you retire. It’s especially good for seniors who are looking to retire in the next few years.

HOW DO I LEARN MORE? It’s easy! Give us a call and schedule a free annuity information meeting with one of our licensed agents. 516-900-7877.