Suppose you already have a fixed annuity or are thinking about buying one. In that case, you probably know that these financial instruments offer considerable benefits for the portion of your portfolio allocated to safe money. However, most financial consultants encourage their customers not to look at fixed indexed annuities and instead stress that having a brokerage account is the superior option. But is it necessary to pick one option over another? Even if brokerage accounts and annuities may be used to fund the same goals, this does not entail that these products are incompatible. Many people in retirement and those very close to retirement can deliberately integrate both. Those who are eligible to benefit from annuities and brokerage accounts include:
- Individuals seeking consistent development in their portfolio
- Those who are searching for a new source of revenue
- Individuals who are looking to make the most of the Social Security System
- Those in need of tax-favored income
On the other hand, annuities offer many extra advantages that brokerage accounts, in general, do not. Income Security For the Rest of Your Life Annuities are the only financial tools that produce lifelong earnings while shielding against market volatility. The capacity of the issuing business to pay out claims determines whether annuities are a viable option. Protection of Principal The return on your original investment is guaranteed under the terms of a fixed annuity contract. This is not the case for a brokerage account. Death Benefit Fixed annuities offer a greater degree of adaptability and personalization than you might initially think. Many businesses provide “riders” or additional optional death benefits features. Essential death benefits and enhanced death benefits are the two that are most common. Those who wish to leave a legacy for their descendants typically opt for increased benefits added via riders. These riders frequently come with a “step-up” when the issuer increases the value of the annuity on the anniversary of the date you begin purchasing it. Tax-Deferred Growth The money you invest in a fixed annuity will receive beneficial treatment in the form of growth exempt from taxation. Those who invest in stocks are subject to paying taxes on dividends and capital gains, provided the money is not held in a retirement account. These tax obligations bring a reduction in your net return. Provisions To Reduce the Financial Burden of Long-Term Care Expenses It’s possible that some types of annuities can help offset the costs of long-term care that Medicare doesn’t cover. This benefit may be of particular interest to individuals who do not satisfy regular long-term care insurance requirements or who cannot pay the required premiums. Conclusion Even if you already have a brokerage account, you should still consider including an annuity in your retirement plan if you want to ensure that you have the opportunity for growth and income but are afraid to put your money at risk. When trying to limit the effect inflation and longevity will have on your money, including both may provide additional benefits and greater peace of mind. Always make it a point to seek the guidance of an experienced financial professional familiar with the many methods that can be utilized to ensure that your money will be secure even after you have stopped working.
Contact Information:
Email: [email protected]
Phone: 4022508277
Bio:
Carl Wyllie is an advisor focused in areas of Medicare, retirement, estate planning, and crisis planning. Carl works with individuals of all ages in planning for their retirement. He is uniquely effective in building working relationships between their families and elder care law attorneys to assist them in avoiding a healthcare crisis. Carl is particularly sensitive to helping provide the means for his clients to maintain their independence and dignity when a change in their health occurs due to the natural aging process.
