Consider an Annuity for Retirement Savings


It’s true that many Americans are not familiar with the meaning of the term “annuity”. Some people mistakenly believe that annuities are products which are only available to, or obtainable by the wealthy class. This is not true at all! An annuity is a methodical way of saving money and earning interest. Annuities could be described as unique financial planning instruments, which are suitable for accumulating money for future systematic distribution. They are financial contracts issued by insurance companies. An annuity can even create an income flow which cannot be outlived!

When you purchase an annuity, you deposit money (a premium) into this financial contract. These premium dollars are then invested by the insurer. Those deposited funds earn interest, or grow in value in relation to the performance of the fund in which they were invested. Your earnings will accumulate on a tax-deferred basis. Annuity funds compound at a greater rate because no earnings are taxed away.

At some point in the life of the annuity contract, the insurance company can convert all or some of the contract’s funds, into a series of periodic income payments. This is determined by the owner, to suit his/her intentions. These payments are calculated to continue for a given number of years, or for the owner’s lifetime. (This process is known as “annuitization”, which means applying capitol to purchase income.) Annuities are designed to accumulate, and later distribute assets, making them ideal for retirement planning.

Today Americans face some serious challenges regarding their financial ability to meet their retirement goals. Many employees no longer enjoy defined pension plans, which guarantee a certain predetermined cash flow. Constant changes to our Social Security System continue to whittle away at our future retirement fund. More members of the Baby Boomer Generation (approximately 76 million seniors) are reaching an age where they will be drawing on this ailing system’s resources. Add to that an increase in our current life expectancy, and it’s easy to see that we will need to be personally responsible to provide most of our own sustainable support for our “Golden Years”!

We need to take proactive measures and choose a suitable means to provide for our own personal retirement fund. It is critical to establish a retirement investment plan now, rather than later, in order to have a sufficient time for your money to grow. You will want to consider your attitude toward risk, before committing to any certain long term investments. Fortunately, there are some types of annuities which guarantee a certain minimum rate of return on one’s investment. There are also annuities which invest the owner’s funds in the stock market, where there is the potential for greater profit or loss.

There are lots of options available when considering what type of annuity to choose. The two fundamental categories are either immediate or deferred annuities. A licensed insurance agent can give you details about fixed, indexed and variable annuities, and explain the basic differences and advantages of each option. You should be certain that all of your questions and concerns are addressed to your satisfaction before making a final decision. Whatever you do, please don’t rely solely on Social Security, and do not procrastinate in starting your retirement savings!

Contact one of our licensed insurance agents at AustinHealthPlans.com by calling: (512) 535-3556 or send any e-mail questions to tom@austinhealthplans.com . We can help you determine what method of retirement savings will serve your particular situation the best. We are available to assist you with free quotes for your insurance and annuity needs, no matter where you live in Texas! We can save you time, trouble and money! We are “Texas friendly” and want to be your agent. Give us a call today.

About tcdiehl

I have been an independent insurance agent licensed in Texas since 2003. My focus is providing affordable insurance coverage through multiple reputable insurance providers for individuals, families, and small groups. I can also help with Medicare insurance needs. Allow me to connect you with the appropriate health, life, disability, long term care, and/or dental plan(s) based on your health, personal, and financial needs. Call me at (512) 535-3556, E-mail: tom@austinhealthplans.com.
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