People in the U.S. hear a lot about how Social Security is in trouble. In the future, the federal programme is likely to play less of a role in the retirement plans of most Americans.
Putting money in annuities is one way to fill in the gaps in a savings portfolio. When you buy an annuity, you pay a premium and in exchange, you get regular payments of guaranteed income. Most of the time, it is used for retirement.
Equity-indexed, fixed rate, and variable rate are the three main types of annuities. The best thing about annuities is that they all guarantee benefits like growth that isn't taxed, the ability to give money directly to heirs or charities, and a steady stream of income for life.
Equity-indexed annuities have become very popular over the past few years. They give interest or other benefits that are tied to an outside equity reference, like the S&P 500 stock index. But you get a guaranteed minimum return in exchange for a limited maximum return. This means that your stock market investments have less upside but also less downside. Your money is never in danger.
Fixed-rate annuities, on the other hand, promise a certain rate of interest and a minimum amount. They have always been the most common types of annuities.
Variable annuities provide more options. You can buy stocks, bonds, mutual funds, and money-market instruments with them.
Trustworthy financial companies like TrueYield Financial want to make sure that investors are happy with their annuity purchases. Here are some ideas for the person who might want to invest.
Make sure the company you work with can sell annuities from more than one company. There are a lot of choices, so work with an agent who can find the best one for you.
Know what you're getting. Talk to your financial adviser or agent about which annuity might be best for your retirement portfolio. Make sure you know everything about the annuity contract you want to sign.
Set clear goals. You can use an annuity to reach a number of financial goals. For example, they can add to your monthly income or give you money in case of an emergency. Choose what you want your annuity to do.
Ask your agent if you can look over your annuity contract for free to make sure you made the right choice.
Find out if a bonus annuity is the right choice for you. Bonus annuities add extra money to the premiums so that a person saving for retirement can make up for stock market losses or get a quick boost to the account value.