The purpose of an annuity is to provide a set income over a given period of time. Annuities provide a place for policyholders to store their money while gaining interest without being taxed until the annuity matures. After the annuity matures, the policyholder receives payments from the annuity. The maturity date and amount of these payments are outlined in the annuity contract.
Annuities can be defined as personal pension in layman’s terms. Getting an annuity cancels out the risk of outliving someone’s savings, and it ensures an income after retirement, with the additional tax advantages as a bonus.
Anyone between the ages of 50 to 60 and is searching for tax-deferred saving-based income is usually the better candidate. You can also get an annuity if you already have a good amount of savings and search for a lifetime income.
Both the annuity and permanent life insurance policies offer the growth of investment; however, as permanent life insurance makes the offer of a death payment, annuities do not—and even when some do, they are not tax-free.
Annuitization describes the procedure of turning your annuity purchase into a sequence of income payments. One of the many benefits of the annuitization of your money is that it distributes payments until death.
Annuities may be partially or fully taxable. This is based on how a person purchased them. When the investor withdraws funds from the annuity, this is when taxation occurs. If you are buying the annuity product with pre-tax funds, then the entire balance will be taxable. However, If you use after-tax funds, then the investor is taxed only on the earnings.
Annuities help provide extra income in addition to your retirement plan and Social Security. You choose how often the annuity makes payments. Some annuities, allow you to withdraw money to make healthcare payments. It’s possible to even automatically withdraw your payments from the annuity for your convenience.
Green Bee offers multiple annuity products from several companies. Contact us to learn more details about these plans today!