Your Annuity Options

One of the best ways to prepare a significant amount of money for your retirement is a deferred annuity. This is especially true if you are not close to the age of retirement. Deferred annuities are those annuities on which taxes are not due until money is withdrawn. 

• Most likely, when you are receiving retirement benefits, you will be in a lower tax bracket. Therefore, when you actually pay taxes on your annuity earnings (upon retirement), they will be a lower percentage than when you invested the money.
  


• Deferred annuities will allow non-taxable transfers. This means that if funds are moved from one option to another within a variable annuity, taxes are not de on any money that has been earned. An advantage of this is that if economic or market-wide fluctuations threaten your funds, they can be moved to best grow and earn interest. 


• The Internal Revenue Service (IRS) does not restrict the amount of money that you contribute each year to a deferred annuity.
  


• Death benefits are another of the advantages of deferred annuities. Generally, when the holder of annuity passes away, heirs are subject to the costs and delays of probate. This means that children, spouses or other family members specified in a will can receive annuity benefits after your death. Spouses and other individuals can also inherit annuities before they have begun to pay benefits. Tax-deferred contributions can continue to be made.
  


• An annuity can easily be used for retirement, but that isn't necessarily its only function. It is quite flexible in that you can set up an annuity simply to invest money for a later date and decide in the future that you would prefer to wait until retirement to dip into it. 


• Not only are annuities flexible because they can be invested and used in a variety of ways, but they are capable of being withdrawn in a number of different ways. You might select a lump sum, to use as payment for a new home or luxury, or you could feel that yearly payments might be the best way to take advantage of the returns from your investment. This second option incorporating periodic payments is called "annuitizing." This allows you to have guaranteed income for your entire life. Also, if you annuitize and continue payments into an annuity, tax-deferred earnings continue to grow and create funds for the future.