What is an annuity and how does it work?
An annuity is funds invested through an insurance company. Annuities are only marketed and sold through insurance agencies, banks, financial planners, and brokerage firms. The contractual agreement that you make with the insurance industry, called annuities have little or nothing to do with insurance coverage. “Annuities provide tax-deferred growth guarantees, professional management, safety, flexibility, growth, and the option of having a monthly income amount that you cannot out live.” Quoted from Gordon K. Williamson’s book, Getting Started in Annuities. How much money may I invest into an Annuity? There is a limit to the amount of money that can be invested in an annuity, for a government or postal employee and it is up to $5,000 for each calendar year. You may invest monthly amounts, or you may invest a lump-sum amount in addition to systematic investing. Annuities may be used as a general investment or a qualified retirement program. When may I invest in an Annuity? Annuities are
June 17, Retirement and Tax-deferred Accounts June 24, Financial advantages of Alternative Living Arrangements Managing your finances is a critical component to enjoying a rich and rewarding retirement. The Boomer Financial Seminar Series is an interactive program that includes a speaker presentation and interactive discussion with participants. Content is appropriate for those who took “Mapping Your Retirement” and want additional financial information or for those who have no previous financial planning exposure. Instructor Gretchen Larson is an attorney who has spent years working with financial and estate planning. She recently moved from Portland, OR to her childhood stomping grounds in Northern Minnesota. She is looking forward to discussions with other Boomers on how to make practical, creative and joyful decisions in planning their retirement years. Concepts in Safety and Health for the Supervisor Registration form June 11-12, Northwest Technical College, Bemidji June 18-19, No
An annuity is made for a couple different reasons. One, it’s there to protect from paying taxes on money until you use it at a later date. So say you had a 500k inheritence and needed to put it somewhere to grow until you used it later on. Then it may be good to put it into an annuity so you can not pay taxes on the gains in the meantime. The second reason for an annuity is for guaranteed income for the rest of your life. So if you put money into it, it will grow until you decide to annuitize. The only bad thing is that you’re paying extra fees and such to keep that money in there. And also, one much realize that once annuitized, the money is not able to be gotten to. You’re only guaranteed that monthly payment and that’s it. If you’re looking for growth and income for your life, look for a good mix of mutual funds. They’re your best bet, with a LOT less fees associated with them. BUT…..one should never have an annuity within a retirement vehicle such as a 401k, IRA, 403b or anything
Typically, an annuity is a lump sum of money that is paid out over a period of time in equal monthly or yearly installments. For example, let’s say you received a $100,000 settlement from an insurance company for a car accident you were involved in and they agree to pay it out over 10 years, in monthly payments at an interest rate of 4% annually. When you do the math, that monthly payment would come to $1012.45. After the 120th payment, you would no longer receive anything because the $100,000 was paid back.
