Planning for retirement and trying to anticipate the financial future requires attention to detail, an understanding of one’s current saving capacity and future costs, as well as knowledge of different types of savings accounts, insurance plans, Social Security benefits, etc. For many individuals, an annuity makes sense in addition to retirement savings accounts.
At Top Investment Solutions, we can answer your questions about annuities. Consider some of the answers to a few of the annuities FAQs (frequently asked questions) we hear most, and reach out to us directly for more information.
As defined by Investopedia, an annuity is a type of insurance contract that is distributed by a financial institution. Per the terms of the annuity contract, the investor/annuity holder pays premiums either in the form of monthly premiums or a lump-sum payment, and the financial institution pays out funds in the future for a specified amount of time. The purpose of an annuity is to provide a guaranteed stream of income in the future.
There are multiple different types of annuities. These include:
As mentioned above, many people have annuities as part of their retirement plan and may have an annuity in addition to investments in a retirement account. Typically, those who are advised to invest in annuities are those who are nearing retirement age; returns may be higher for younger people who choose to invest in other options, such as mutual funds.
Yes, there are fees associated with purchasing an annuity. The fees will differ based on the type of annuity but might include administrative fees, investment management fees, “surrender charges,” which are charged if you prematurely withdraw the annuity, and mortality and expense fees.
As you think about your best options for supporting yourself financially after you are no longer working and earning an income, you should consider the benefits and drawbacks of an annuity. At Top Investment Solutions, we can answer all of your annuity FAQs and guide you through the various types of annuities and related fees. To learn more, reach out to us by phone or online today. We serve clients nationwide.
This material is not a recommendation to buy, sell, hold, or roll over any asset, adopt an investment strategy, retain a specific investment manager or use a particular account type. It does not take into account the specific investment objectives, tax and financial condition or particular needs of any specific person. Investors should discuss their specific situation with their financial professional.
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