Those employees getting closer to retirement assures that their finances obtain the right amount so that they don't fall into economic threats later on. Most people opt for the bank CDs and those with a better mind about savings he could pick the option, fixed annuities. The fixed annuity is advantageous over a bank CD as it is capable of providing all the protection of a CD, in fact, something more.
The main difference between bank CDs and fixed annuities are that towards the end of the guarantee the latter enables the investor to pocket a certain contractual minimum which is absent in the case of CDs. Fixed annuities have good rates ,almost always more than bank CDs in terms of percentages. Thus these annuities with their guaranteed rates are by far a better option in this era of constant decline in interest rates.
Alike a CD, the fixed annuities are supposed to hold a precise duration, else, is subjected to a penalty. It is called the surrender period then. Once it gets over, a fresh surrender time is begun and the interesting part is that one needn't pay any penalty which makes it different from a CD where the bank could earn a sum from penalty.
Another merit that makes fixed annuities different from a CD would be the non-taxing of expansion on the investment. In case of CDs much of the rise in savings moves on to tariffs even if it is moved to the subsequent CD or has withdrawn finances.
If you purchase a fixed annuity while you are employed and if your income falls within the high tax bracket then you have the advantage of the tax shelter offered by this annuity. Your tax liability is only at retirement time when you remove funds to supplement your income at that stage. By then you would fall in the lower income bracket thus making the tax amount to be paid on growth of the annuities quite minimal.
Just like CDs, fixed annuities have governmental guarantees. Instead of the FDIC, the Federal Depository Insurance Company, every insurance company that operates in your state backs the annuity funds. Each state has an Insurance Guarantee Fund. If one of the companies licensed in the state goes out of business, every company that operates in the state supplies funds or absorbs clients so no one loses money.
A fixed annuity imposes 2 restrictions on the investor which can be considered a compromise to enjoy the tax-deferred status that it promises. One is that you have to wait until you are 59 before you avail any returns from it or else you have to concede to the clause of taking systematically equal installments from it until you are 59 or in the least for 5 years. If you do not comply with these clauses you get impose a 10% penalty on the growth. Thus the nature of the fund signifies that it is solely meant for retirement solutions.
Find an agent or browse through the net for more information on this investment option. A fixed annuity certainly suits those looking for maximum returns through a fixed option. - 31884
The main difference between bank CDs and fixed annuities are that towards the end of the guarantee the latter enables the investor to pocket a certain contractual minimum which is absent in the case of CDs. Fixed annuities have good rates ,almost always more than bank CDs in terms of percentages. Thus these annuities with their guaranteed rates are by far a better option in this era of constant decline in interest rates.
Alike a CD, the fixed annuities are supposed to hold a precise duration, else, is subjected to a penalty. It is called the surrender period then. Once it gets over, a fresh surrender time is begun and the interesting part is that one needn't pay any penalty which makes it different from a CD where the bank could earn a sum from penalty.
Another merit that makes fixed annuities different from a CD would be the non-taxing of expansion on the investment. In case of CDs much of the rise in savings moves on to tariffs even if it is moved to the subsequent CD or has withdrawn finances.
If you purchase a fixed annuity while you are employed and if your income falls within the high tax bracket then you have the advantage of the tax shelter offered by this annuity. Your tax liability is only at retirement time when you remove funds to supplement your income at that stage. By then you would fall in the lower income bracket thus making the tax amount to be paid on growth of the annuities quite minimal.
Just like CDs, fixed annuities have governmental guarantees. Instead of the FDIC, the Federal Depository Insurance Company, every insurance company that operates in your state backs the annuity funds. Each state has an Insurance Guarantee Fund. If one of the companies licensed in the state goes out of business, every company that operates in the state supplies funds or absorbs clients so no one loses money.
A fixed annuity imposes 2 restrictions on the investor which can be considered a compromise to enjoy the tax-deferred status that it promises. One is that you have to wait until you are 59 before you avail any returns from it or else you have to concede to the clause of taking systematically equal installments from it until you are 59 or in the least for 5 years. If you do not comply with these clauses you get impose a 10% penalty on the growth. Thus the nature of the fund signifies that it is solely meant for retirement solutions.
Find an agent or browse through the net for more information on this investment option. A fixed annuity certainly suits those looking for maximum returns through a fixed option. - 31884
About the Author:
John C. Ryan discusses financial retirement options including fixed annuities and the other annuity types. Did you like this article? To learn more about how a fixed annuity differs to Bank CD's or other financial options, visit our blog.
