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LEARN MORE ABOUT: Retirement Annuities
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A flexible annuity is a type of investment product that provides a steady stream of income during retirement. It is different from a traditional annuity in that it allows the investor to make changes to their investment options and contribution amounts over time.
When an individual purchases a flexible annuity, they make a lump sum payment or a series of payments to an insurance company. In return, the insurance company agrees to pay the individual a regular income for a set period of time, typically for the rest of their life. The amount of income received from a flexible annuity is based on factors such as the size of the initial investment, the individual’s life expectancy, and prevailing interest rates.
One of the main advantages of a flexible annuity is its ability to adapt to changing financial needs. Unlike traditional annuities, which lock in an investment strategy and payment amounts for the long term, flexible annuities allow for adjustments to the investment portfolio and income payments. This can be particularly beneficial for retirees who want the flexibility to adjust their finances as their needs change over time.
Flexible annuities also offer tax-deferred growth on the invested funds. This means that any investment earnings within the annuity are not subject to income tax until they are withdrawn. This can help the investment grow faster over time and potentially result in a larger income stream during retirement.
On the other hand, flexible annuities may come with higher fees and expenses compared to other investment options. It is important for investors to carefully consider the costs associated with a flexible annuity and evaluate if the potential benefits outweigh the fees.
In conclusion, a flexible annuity is a useful option for individuals who want a steady stream of income during retirement while maintaining some level of control over their investment portfolio. While it offers flexibility and potential tax advantages, it is important for investors to understand the associated costs and risks before making a decision. As with any financial decision, it is advisable to consult with a financial advisor to determine if a flexible annuity is the right choice for your retirement planning.
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