With proper understanding, investing in annuities can be one of the smartest decisions of your life. Unfortunately, even the most financially savvy people do not fully understand this investment option. To ensure you are maximizing your investment, here are a few things you probably did not know about an annuity.
They Should Not Substitute Retirement Accounts
When you purchase an annuity, you may think you can stop contributing to your IRA or 401k plan. However, it is important to note that an annuity should never be considered a substitute for your retirement accounts.
Like traditional retirement accounts, annuities have tax deferred elements on gains, but the purchase of an annuity should be used as supplemental form of retirement.
They Are an Insurance Product
The FDIC does not insure a deferred annuity, but they are protected and backed by millions of dollars in money due to the insurance company’s assets.
Some people believe investing in an annuity is frightening and overly risky, but since they are products purchased through insurance companies, there is little risk with this investment option.
You Are Guaranteed Interest
After the end of your annuity time frame, you will want to see some sort of gain in interest. In most cases, you will see an increase, but if your annuity has not seen any interest, your insurance company will apply a guaranteed rate. This rate is usually discussed when you initially purchase the annuity.
Although the guaranteed interest may not be a large sum, it is helpful and comforting to know you are guaranteed a certain amount.
Withdrawing Is Not That Complicated
Most people live in fear over having an extreme amount of stress and anxiety when it is time to withdraw from their investments. Withdrawing from your IRA or 401k plans can be challenging, but withdrawing from an annuity is not that complicated.
If you need access to the money due to an illness or need for long-term care in a facility, you are able to withdraw from your annuity without any questions or penalty fees. In addition, you are able to withdraw a percentage from your annuity each year without penalties. This percentage is usually 10 percent, meaning you can withdraw up to 10 percent of your account value each year.
Thankfully, there are many annuity options available, so finding one suited to your needs is a definite possibility. To learn more about annuities and how to make smart investments with ease, contact Jason Graziani in the Frisco, TX area at (972) 992-1920 today.
Annuities Frisco TX
15150 Preston Road, Suite 300
Dallas, Texas 75248