There are many financial products that can be purchased to prepare for a stable retirement. Apart from major health insurance and life insurance, you can also prepare for retirement by buying an annuity. These contracts promise a fixed income stream later in life in return for premiums paid now.
This can be a convenient option for people looking to secure a base income in retirement, so keep reading to learn more.
What Is An Annuity?
Annuities are a means of creating a steady cash flow that will be available to you during retirement. The purpose of this product is to assure you that you won’t outlive your assets.
Annuities are regulated by the Securities and Exchange Commision and Financial Industry Regulatory Authority. In order to sell annuities you must hold a state-issued life insurance license and a securities license if you sell variable annuities. Always make sure your broker or agent is insured before purchasing products, as if you neglect to do so, the products could be void.
At Avina Financial Group, all of our agents are fully licensed, so you can trust us to provide you with effective advice regarding your annuity.
How Do Annuities Work?
Annuities work following a simple process. First you fund the annuity earlier in life, then after a set number of payments are contributed, you can begin collecting payments. The payments may occur for a certain length of time, until you reach a certain age, or until another specific point is met. In many cases, annuities pay a steady cash flow until death.
If you have an annuity that allows it, you may be able to trade out your long-term payments for a lump sum payout. This option can provide you with a lot of spending power quickly, but be careful. If you withdraw early you may be hit with certain withdrawal penalties. We don’t suggest lump sum payments for younger people because of this.
Types of Annuities
Annuities come in two forms, fixed and variable. Fixed annuities offer larger payments to the recipient periodically, while variable annuities may allow for larger payments in the future. Variable annuities have the potential to grow based on investments, while fixed annuities are a set amount. Which one is best for you depends on if you have other retirement income lined up, and if you are willing to risk losing money on the potential for growth.
Find An Annuity That Fits
Do you need help shopping for an annuity that fits your lifestyle? We can help you take the first steps. Give Avina Financial Group a call now to get started with a free consultation.