Annuities are an investiture alternative that allow a person to collect tax deferred payments for a certain amount of time. As with any type of investment, research is essential, especially when such a potentially large amount of cash is at stake, after all, you do not want to be taken off guard with hidden clauses. As we are all living longer these days (eighty to ninety years is becoming increasingly normal), a person is looking to spend one third of their lives as a retire.
So what are some of the annuities pros and cons?
You should think about an annuity for tax deferred income after you have placed as much as you can into a Roth/Traditional IRA or a 401K. Tax deferred payments of an annuity are attractive due to their potentially high level of return. The tax benefits can be wiped out with high fees and this is one of the cons that needs to be thought about. As with all investment plans there are administration costs which can consume the profits but giving up the plan early can also be costly to the annuity holder.
It does not take long for these fees to mount up.
It is vital to be conscious of all of these sorts of fees when choosing your annuity.
A reverse annuity mortgage allows a person to take tax free payments borrowed against their home loan. To many retired people, this is an appealing aspect of an annuity. Personal and medical costs can always arise and this facility will give low income seniors with a tax free financial aid and stability for the rest of their lives.
non qualified annuity
Although, when a reverse mortgage annuity is taken out, the holder must be aware that in the event of their death, their realty becomes the property of the annuity lender. Banks do have very strict rules for those who apply for the reverse annuity mortgage. The annuity holder needs to fully understand the outcomes once they die specially (but not exclusively) in the case of a reverse annuity mortgage so reading the 'fine print' is essential.
If you would like to learn more about annuities good and bad points, in an effort to determine if an annuity is the right choice for your retirement financial planning, you should seek the advice of a certified financial planner. Your personal needs must addressed plus the benefits and drawbacks need to be explained in layman's terms, which is one thing only a financial planning professional is capable of doing.