…(read more)

LEARN MORE ABOUT: Retirement Annuities

REVEALED: How To Invest During Inflation

HOW TO INVEST IN GOLD: Gold IRA Investing

HOW TO INVEST IN SILVER: Silver IRA Investing

A deferred annuity is a type of annuity that starts at a future date instead of paying out immediately. It is a contract between a person and an insurance company, where the person agrees to make a lump sum payment or regular contributions, and in return, the insurance company promises to provide a stream of income at a specified time in the future.

Deferred annuities are popular retirement savings vehicles because they offer several advantages to investors. Firstly, they provide tax-deferred growth, which means that the earnings on the initial investment are not subject to taxes until the time of withdrawal. This can help investors accumulate more money over time, as the money continues to grow without being reduced by taxes.

Secondly, deferred annuities offer income guarantees, which means that the insurance company guarantees a minimum income amount, regardless of market fluctuations. This can provide peace of mind for investors, as they will have a dependable income source to support them in retirement.

There are two main types of deferred annuities: fixed and variable. Fixed annuities offer a guaranteed, fixed rate of return for a set period of time, similar to a certificate of deposit (CD). Variable annuities, on the other hand, allow investors to choose from a selection of investment options, such as mutual funds, stocks, and bonds. The earnings on variable annuities fluctuate with the performance of the underlying investments.

While deferred annuities offer several benefits, they also have some drawbacks that investors should consider. Firstly, they typically come with high fees and surrender charges, which can be prohibitive for some investors. Additionally, they are illiquid investments, which means that it can be difficult to access the money in case of an emergency.

Overall, deferred annuities can be an effective way to save for retirement and provide a guaranteed income stream in later years. However, investors should carefully evaluate their financial situation, investment goals, and risk tolerance before investing in a deferred annuity. Seeking the advice of a financial professional can also be helpful in making an informed decision about whether a deferred annuity is right for your retirement planning needs.