Why Buy An Annuity

You dont pay taxes on any interest you earn until you withdraw it.

Why buy an annuity. Thats because if you retire earlier than expected converting a portion of your assets to an immediate annuity will enable you to begin taking income right away. Buying an annuity is a way of turning all your pension savings that youve built up over the years into an income to last you the rest of your life. By investing in an annuity you are incurring a counter party risk which we talked about at length in the past.

An annuity can also help provide income protection at the beginning of retirement. Odds are that you will eventually be pitched the best annuity ever so its important to know the main reasons why you might not need to buy an annuity. Income annuities also known as immediate annuities or immediate payment annuities were designed for that purpose.

An annuity is a contract you purchase from an insurance company designed for long-term investing. There are many reasons to choose an annuity not the least of which are because of the sheer customisability of a life annuity. Think of the annuity as your basement.

The insurance company you buy your annuity from might also provide some type of minimum income guarantee in the event the markets dont. We recommend a person buy an annuity for what it will do contractual guarantees and not what it might do hypotheticals. With a lifetime annuity your income will last as long as you do With a lifetime annuity you are guaranteed periodic payments for as long as you live.

The reasons to choose an annuity are many and tangible. In too many cases. With annuities retirement spending is appropriately funded with a non-risky asset.

You may be charged a penalty if you take your money out early. Annuity premiums insurance-industry terminology for the purchase price of your contract grow tax-deferred until you start receiving payments. You are betting that the Annuity Company will be here to pay you when it is time to payout.