An Annuity Protects Your Finances In Retirement

As you approach retirement, the prospect of sitting back and relaxing with your feet on the footstool, without work beckoning on Monday morning seems particularly inviting. To enjoy your twilight years with peace of mind, you would need a steady source of income that enables you to live comfortably. Investing in an annuity provides you with that sort of financial security.

Planning for your golden years

With life expectancies increasing, you would require funds to last for at least another 10 - 20 years when you reach 65. Saving early for retirement will increase your nest egg and prevent you from having to make serious lifestyle changes to cope with insufficient funds. Healthcare payments later in life can be easily managed when you have guaranteed sums to defray the cost of caregivers.

Security for ageing women

On a balance of probabilities, women are more likely to be the main caregiver for an ill or aged spouse or relative. Women are more vulnerable as they have longer life spans and lower income levels compared to men. Often, women have to give up their jobs to care for their infirm dependants. In these instances, an annuity serves to protect both their income and personal health care needs.

Benefits to consider

Although the returns from investing in an annuity depends on your attitude to risk and how much wealth you eventually want to have, the benefits that accrue are manifold:

* Cash reserve that is safe. At its most basic level, it grants you safety in terms of your funds especially when facing the vagaries of a volatile economy.

* Moderate growth in capital. The associated interest could double that of Certificates of Deposit or CDs and you’d see your money steadily increase.

* Deferment of tax payable. Unlike cash invested in conventional schemes that are subject to withholding tax, the tax regime allows a deferment of the tax payable on any monies invested with the insurance company.

* Income for the duration of your life. Monthly payments are made from a financial plan that guarantees you lifetime income. It’s almost like receiving a salary, which, depending on the source of the funds, can be wholly excluded from tax. Although inflation deteriorates the buying power of money, there’ll still be sufficient cash for your primary needs.

* Higher payouts for those with poor health. Individuals with failing health, such as heavy smokers or those with heart disease and liver problems, can choose an option that provides them with higher annual amounts as opposed to someone who is likely to live longer.

Your financial resources should afford you a cheerful time when you have hung up your working hat. Retirement funds should not be linked to a stock market that crashed when mortgage backed securities imploded on the back of risky financial products of banks that eclipsed thrifty and prudent business practices by the bastions of commerce. By investing in an immediate annuity, you guarantee your financial security with a stable income stream paid to you consistently for the rest of your life.