Determining if Annuities are Right for You


Sell structured settlement payments

So you may know that there are plenty of different retirement options to choose from these days. One of the most reliable retirement plans is to buy an annuity. But what are annuities?

Annuities are an insurance product that pays out in monthly statements once you’ve hit a certain age. Usually, these products are used by people trying to manage their income during retirement. Buying annuities can be done by almost everyone, anytime, but the payout period occurs usually when the individual turns 60.

There are a few exceptions. For instance, if you fall under a lower income bracket, you may not qualify for an annuity because you do need to purchase it with a large lump sum. Eight out of 10 non-qualified annuity owners have a yearly income below $100,000. Most non-qualified annuity owners are also female, even though the majority of annuity owners are women. This is due to the financial stability buying annuities offer.

Owners often demonstrate a strong loyalty and commitment to their annuity purchases; 93% of annuity owners report still having their first one. People can choose to either receive payments for the rest of their life or for a certain number of years.

There are various forms of annuities out there depending on your financial wants and needs. Those who are investment savvy may choose a variable annuity over fixed annuities. Variable annuities give purchasers a payout stream based on the performance of investments made (stock market, etc.). Fixed annuities offer a guaranteed payout that does not falter as long as that person is still living.

Variable annuities are often not suitable for those trying to meet short-term goals because there can be substantial taxes and insurance company charges if the person withdraws their money early.

After buying annuities, you may decide that you need to sell part, or all, of your payments in order to pay off a debt or medical bills. You can receive an annuity lump sum payment if you decide to surrender the annuity. If you have owned it for less than seven years however, you will probably need to pay a surrender charge (these can be quite hefty).

Other charges may apply, such as income taxes. If you have any investment earnings from your annuity, these will be taxed. You may also be subject to pay a 10% withdrawal penalty if you are under 59 1/2 years old. Another choice would be to transfer your money into another annuity if you don’t like how your current one is set up. The surrender charge will still apply but you won’t have to pay any tax or other penalty.

Deciding whether an annuity is right for you can be a difficult process, so many sure you consult a financial adviser or conduct thorough research before making an investment.

Leave a Reply