Guaranteed Annuities

Guaranteed annuities are simply annuities that are guaranteed to provide steady, reliable income during a person’s retirement years. Most forms of annuities could be considered guaranteed, although there are a few options, such as the variable annuity, that does come with some risk. These accounts can be the best way to invest a retirement account for many people. Bills and living expenses do not stop occurring just because a person retires, so it is important to arrange for some form of income outside of government programs, as those are becoming more and more unstable by the minute.

In many states, the insurance company will guarantee an annuity against loss. In addition, insurance regulating organizations offer some type of protection should the company holding the annuity come to financial ruin. These are definitely things that any investor should look for when comparing guaranteed annuities, since it does little good to plan for retirement if the entire investment is lost.

One thing to consider when looking at annuity options is the guaranteed minimum yield of the investment. Some guaranteed annuities can offer interest rates as high as 10 percent, but most will fall in around 3 percent. While it is certainly advisable to seek out the highest minimum yield possible, one should also consider any additional costs associated with a higher return plan. In some cases, these costs can actually exceed the additional gain, defeating the entire purpose of guaranteed annuities.

Guaranteed Liquidity and Income

Another aspect of guaranteed annuities that is attractive to many people is the ability to access the funds in the account whenever desired. If the investor has not yet reached the age of 59 ½ before making a withdrawal, there could be penalties involved, but they will be able to access the funds. This can be a comfort for those who may have unforeseen emergencies arise that necessitate removing a portion of their retirement funds to deal with the situation at hand.

The penalties involved with making withdrawals on guaranteed annuities will vary from one plan to another. For that reason, it is important to thoroughly explore all of the available options before settling on one or the other. In most circumstances, unless there is an extensive history in investments, it is prudent to seek the counsel of a reputable and experienced financial advisor. This should preferably be someone other than the representative that is trying to sell the product.

Guaranteed annuities can be a wonderful retirement investment option for many people, but they are not suitable for everyone. The amount of principal available for investing, along with tax status and any number of other influencing factors may make a substantial difference in the benefits from one individual to the next. Still, they are something that are definitely worth looking in to when planning for the future of the golden years. It is much more reassuring to know that there will be a set amount of money coming in every month than it is to wonder where this month’s bill money will come from.

For more information on annuities and your retirement peace of mind, check our other pages. Annuities for Dummies is perfect for the newcomer, as is Annuities Explained. The more you learn while visiting Lump Sum Annuity, the more confident you will feel about your investment decisions.