People spend the majority of their youth and middle life years, putting best efforts to make money. In the last, one expects that his/her retirement life to be happy and prosperous. Well, whether you like it or not, finance plays a crucial role in deciding how the after work-life would be. Retirement is the stage of the life where you expect to be relaxed sitting in your rocking chair and watch the setting sun. But, to get that kind of freedom, you must ensure that your financial background is sharp.
You probably hope to live a dependent financial life. After retirement, a regular income source is required to so that you can handle the expenses of you and your partner on your own. For this, investing in annuities can be a good option because you will be getting a good source of income that will be enough for you to live your after-work life.
Now, let us understand about this form of investment in a better way and see how it can benefit you.
What Exactly are Annuities, and What Makes it a Good Retirement Funding Source?
Annuities are financial products that can be availed from insurance companies that ensure to give monthly payments. Retirees generally use this as a regular income stream which helps them to manage their expenses on their after-work life.
There are other forms of sources that provide funding to the retirees. But, what makes annuities an excellent financial source for retirement is because of the tons of benefits it offers.
- They come with inflation protection
The first and foremost benefit of annuities is that they provide a fixed amount of income for the rest of your life, primarily if you have invested in the fixed annuities. They are designed in the way that it provides inflation protection, so even if you are investing in it right now, you will be getting a good income even after 10-20 years of life.
- They are easy to understand
Unlike other forms of investment tools, spending money in annuities is quite easy and less complicated. This is simple math- you hand over the money to the insurance provider, and in exchange, you get fixed income after the rest of your life. The amount of money that you will be getting after your work life will be mostly determined by your age and the interest rate at which you bought the annuity.
So, if you are getting a good offer and don’t have enough funds, then you could use a short term loan to buy it. A 12 month loan with bad credit and no guarantor from a direct lender will be enough to handle it.
- It comes with the benefit of tax-deferral
Another significant advantage of investing in annuities is that they are tax-deferred. So, you can invest in them even before you pay your taxes. Therefore, you won’t have to pay taxes in the starting stage while investing. You will have to provide taxes after you start receiving payments, and even on that, there will be many tax reductions which are the benefits given to retired people.
- Guaranteed returns on fixed annuities
The company will use the amount of money that you will put into the annuity as an investment. So, it is a well-known fact that when money is invested, there are risks involved. However, if you are going for the fixed annuity, then you get guaranteed income for the rest of your life. Several reasons make fixed annuities an excellent funding source for retirement.
- No risk of losing money
- High growth
- Safer investment tool
- Stable income
- Easy liquidity option
- Fixed income
The returns that you will be getting on annuities will be fixed so you will have a clear idea of how much money you will be getting every month. Now, this can prove to be a great benefit for someone who is retired. It will become more comfortable for you to budget and track your expenses. And if you have taken very bad credit loans from the direct lender for an emergency in the past, you could easily plan to make the repayment.
So, these were the significant benefits that one can get by investing in annuities that will ensure a stable retirement life for you.