When Is An Annuity Appropriate?

It is important to understand that annuities can be an appropriate tool if used properly by you and your advisor. Annuity contributions are not tax deductible. That’s why most experts advise funding other retirement plans first. If you have already contributed the maximum allowable amount to other available retirement plans, however, an annuity can be an excellent choice. There is no investment limit to your annuity. Like other retirement plans, the funds are allowed to grow tax deferred until you begin taking distributions.

Annuities are designed to be a long-term investment vehicle. In most cases, you’ll pay a penalty for early withdrawals. If you take a lump sum distribution of your annuity funds within the first few years after purchasing your annuity, you may be subject to surrender charges imposed by the issuer. An annuity is worth considering if you are certain that you won’t need the invested money until AFTER age 59½. If your needs are more short term, you should explore other options. Most contracts are 5-10 years, we DO NOT recommend purchasing an annuity that is longer than 10 years.

These are just a few of the important questions to consider as you evaluate what is necessary for a happy and prosperous financial future. These questions may seem a bit overwhelming, but remember you don’t have to figure out all the answers alone.

As you approach retirement planning, you may have the following questions:

Are you on the right course to achieve your future financial goals?
What are your dreams for retirement?
Have you sufficiently planned your spending needs and wants?
Do you have a professional (financial advisor) to offer support and guidance?