Monthly Archives: February 2014

Realise the Potential of an Annuity

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Annuities are becoming an integral part of financial portfolios for many consumers. This is with good reason, as there are several advantages to investing in the right annuity. Understanding annuities and what they can provide during retirement years can be a stable means of ensuring financial security during a period of time that is meant to be enjoyed and as worry-free as possible.

An annuity is a product sold by insurers that pays out income during retirement. They are becoming increasingly more popular with consumers and investors because they allow for a steady and stable stream of income during retirement years.

The process of an annuity is as follows:

1. The consumer invests in an annuity.
2. The insurer makes payments to the consumer on a future date or series of dates.
3. Payments can be arranged to occur in one lump sum, monthly, quarterly, or annually.

The size of annuity payments is determined using several factors, including the length of time agreed upon for the payment distribution period. Consumers can choose to receive their payments for the rest of their life or they can opt to receive payments for only a certain number of years. There are also different annuity options that could impact the amount paid off during each payment.

Advantages
There can be several advantages to investing in an annuity. One of the biggest of these is the idea that consumers are able to put away a large sum of money and defer payment of taxes. There is no annual limit on contributions for an annuity, unlike other investment schemes such as 401 (k)s or IRAs. This allows for consumers to invest a great deal in their retirement and is especially beneficial for those who are closer to retirement age and are trying to save more in a shorter period of time.

Secondly, the money invested in an annuity compounds each year without the consumer needing to pay taxes. This means that the investor can be keeping each dollar invested while reaping the benefits of it being compounded year after year. This can be very advantageous when compared to investing in taxable investments.

Thirdly, the advantage of choosing how payments will be delivered can be incredibly beneficial to consumers. They may choose to receive a lump-sum or may choose to have guaranteed payments delivered over a determined period of time. This can allow the consumer to use the money for whatever they choose. This can include spending the money on debts so that retirement can be enjoyed without having to worry about previous debt payments. The money could also be used to make a larger purchase right before retirement, such as a car, vacation, or holiday home.

For those who are retiring, a guaranteed stream of income or larger lump-sum payment can be incredibly beneficial. It can be used for virtually anything and its use can be determined exclusively by the investor. For those who are retiring, a guaranteed stream of income or larger lump-sum payment can be incredibly beneficial. It can be used for virtually anything and its use can be determined exclusively by the investor.

For those who choose to invest in an annuity and who do the appropriate research into which annuity will suit them and their family best, it can really become a stable and secure way to ensure that retirement years can be enjoyed to their fullest. Expenses can be paid before enjoying retirement, or the money can be used to enjoy a holiday or extended vacation. Whatever is decided, the choice is the consumer’s to make. This can be an exciting prospect for investors who are looking to alleviate their life stressors during their retirement years.

Only Buy Annuities from Reputable Providers

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While choosing the best annuity can be an important decision, it is at least as equally important to choose to invest with the right provider. There are a number of different investment and annuity products available from nearly every provider but they are not a one size fits all. Rather, it is important that investors ensure that they are investing their money in both the right product as well as with the right provider.

To begin, it is crucial for investors to make sure that they buy annuities with FSA authorized and regulated annuity providers. The Financial Services Authority serves as a watchdog to ensure that investors are shopping around for the best annuities. In recent years, the FSA has determined that many investors are not using the open market to buy the right annuities. In fact, six out of every ten annuity investors are simply choosing the option offered by their pension provider, instead of shopping around and potentially finding a better fit for their financial needs.

Not only have some investors been failing to use the market as a means to ensure that they are buying the right annuities, some consumers are even falling victim to scams that are putting them in negative equity situations, forcing their spouse to end up actually paying off debts after death of the investor.

While choosing the best annuity can be a time consuming task, it can also be a worthwhile investment of both time and money. However, choosing to buy the best annuity is only part of the research and work associated with investing. Buying annuities also involves picking the perfect provider, one that is both FSA authorized as well as one that provides the best annuity for purchase. This means finding an annuity and provider that will cater to the individual and unique needs of the consumer. Not all annuities will work for every investor and not every provider will offer the best annuities for purchase for each consumer.

Annuities have quickly taken over the retirement market and offer a solid and reputable way to ensure financial stability during the retirement needs. However, they can only do so if the right annuity and provider are chosen. Buying annuities can take a great deal of time and research but it is worth it for the investment that can potentially be paid out to the consumer.