Here we explore 7 reasons why you should have a fixed annuity as a part of your investment portfolio. An annuity is not for everyone, however, if you are looking for a safe way to grow your money for retirement, an annuity may be for you.

1. A Fixed Annuity provides Tax Deferred Growth for Retirement
The number one reason people purchase an annuity is as a secure investment for retirement. An annuity allows you to receive tax deferred growth on your money, until you start to receive payments. What’s the benefit of this? It’s huge. If you are in the 40% tax bracket and you invest $10,000 into a tax-deferred annuity at 6% with a plan to retire in 30 years, come that time, that investment would grow to $57,435.

 

 

 

 

If the same investment were taxed (as most of your investments are), you would only receive $28,893. If your tax rate was only 20%, you would still only accumulate $40,817 – quite a difference

2. A Fixed Annuity provides a Good Return
Fixed annuities have historically offered a higher return than CD’s and Government Bonds, even before taking into consideration the additional benefit of tax-deferral. This is especially true in the current economy, with secure investments offering very low rates, some fixed annuities are providing close to 8% return.

3. A Fixed Annuity provides Guaranteed Payments at Regular Intervals
Fixed annuities are not linked to stock market fluctuations. Annuities pay monthly payments, regardless of changes to the economy. People can’t afford to deal with major market volatility (as we’ve seen the in the last 18 months). Fixed annuities to relax, knowing that their nest egg is safe.

4. A Fixed Annuity offers Low Risk and a Secured Principal
The principal is secure with a fixed annuity, and you know your interest rate ahead of time – so it is quite a secure investment. No investment is 100% secure, however, annuities also have additional protections. If your insurance company is to become insolvent, a minimum of $100,000 and up to $500,000 of your annuity would still be protected, by state law (amount depends on the state of residence).

5. A Fixed Annuity allows Unlimited Contributions
Unlike a 401(k) or IRA you can buy as many annuities or invest as much as you like.

6. A Fixed Annuity provides your Loved One’s with Inheritance Benefits
With a fixed annuity you can provide money tax free to loved one’s in the case of death.

7. A Fixed Annuity allows you to provide your Loved One’s with Tax-Free Gifts
You can give money to as many loved one’s as you would like. Up to $10k per person, per year, tax free.

These are 7 of the reasons why a fixed annuity may be right for you. To receive the best quotes for a fixed annuity, or have any of your questions answered, fill in our annuity quote page, and a representative will contact you shortly.

As a follow up to our article on 7 reasons why a fixed annuity may be right for you (above), we will explore 3 reasons why you should choose a fixed annuity over a variable or index annuity. We want to stress that a fixed annuity is not always the best decision (and we do offer advice on all three annuity options). However, the following scenarios are when a fixed annuity would likely make more sense to you.

1. You Are Looking for Security
There is a myth out there that annuities as a whole are risk free (see our Agents page for discussion of this). These myths are often sadly perpetuated by Insurance agents aggressively selling annuities versus listening to the needs of the investor.

Annuities as a whole are nowhere near risk free. If you choose a variable annuity, the risk you presume is based on the stocks, bonds, or securities that you choose to invest your annuity money into. An indexed annuity, can also go up, or down based on the market. Fixed annuities resemble the secure investment that you may have heard annuities provide. With a fixed annuity your principal is protected, and you earn a guaranteed level of interest.

If you’re looking for security, and don’t want to run the risk of losing the finances you’ve built for retirement, a fixed annuity is a far better option than a variable, or indexed annuity.

2. You Want To Know How Much You’ll be Paid Each Year
Many people hate the unknown. If you put your money into a variable or index annuity, payments can increase, and payments can decrease, but they are unlikely to stay the same.

If a significant part of your retirement income is coming from an annuity, this volatility can be frustrating, and it can make it difficult to plan vacations, and other large purchases.

3. You Are Looking For Convenience and Little Stress
Some people feel stressed when it comes to investments. A lack of will to endlessly research stocks, or a lack of confidence in yourr financial advisor can make investments a frustrating way to spend time.

A fixed annuity is a far more convenient option. Once you decide on your annuity, you know what your interest rate is, and you don’t have to worry about it going down. So just lay back, choose your next adventure, and let the good times role.