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In this day and age, it's full-time work that makes the world go around. It's next to
impossible to survive - and succeed - without having a full-time job. So how do you plan for your retirement years, when you can no longer, or no longer want to,
work a full-time job?
One answer is to invest in a life annuity. A life annuity is a fund that you contribute to
during your working years, while you have a steady and reliable income. The advantage to investing in a life annuity, instead of just saving the money yourself, is
two-fold: your investment grows according to the interest rates the life annuity offers, and the money is tax-free until it is withdrawn from the life annuity. The
funds in a life annuity will not be taxed until you retire and start getting payouts, at which time it is considered income and is taxed as such.
A life annuity enables people to plan their retirement. Once you retire and start getting
payouts from your life annuity, you'll get monthly checks for the same amount each time. This means that you'll have a steady income to depend on, even when you no
longer work a full-time job. You can also purchase a life annuity all at once, instead of investing gradually over the years - an option that is particularly popular
with those who want to retire early, leaving less time to accumulate a large investment, or those who did not plan ahead and start investing in their future early
on.
To purchase a life annuity, you make a one-time payment and distributions typically begin
within 30 days, but can be delayed for up to one year. A life annuity can be fixed or variable, just as with deferred annuities. The income payments you receive from
a "fixed" life annuity will never change and are based on the amount you contribute and the interest rate environment at the time of purchase.
A life annuity can provide dependable security: a stream of income payments that will continue for the rest of your life or for a period you select. If you are
about to stop working, a life annuity may be a good place to invest a large lump sum of money accumulated through a deferred annuity, a retirement plan or other
savings vehicle. A Single Premium Life Annuity is flexible and suitable for a variety of income needs. A life annuity is most typically used to fund income
requirements while in retirement. However, they can also be used to provide a source of income to dependents after your death, to provide specified child support or
alimony payments, to fund specialized education for a disabled child or to consolidate assets and turn them into an income stream.
Under current tax law, a portion of each payment received from a non-qualified life annuity is tax- free until your total premium is recovered. The remainder of each
payment will be taxable as ordinary income in the year received. |
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