Annuities and market risk are something all investors worry about, but those close to retirement have limited time to recover from the loss. If you’re within ten years of retirement, your investments are at a critical stage to continue to gain value and avoid loss. Without thinking through the dynamics of gains and losses, investors leave themselves open to market risk that could prematurely deplete their retirement assets.
One way that investors avoid loss is by including annuities in their retirement portfolio. Annuities, which are becoming more widely used in the financial services industry, are a contract with an insurance company to provide investors with a guaranteed stream of income in retirement. They offer tax-deferred growth of earnings similar to other traditional tax-deferred investments. However, many investors still don’t fully understand the different types of annuities and market risk, how they work, or the fees associated with them.
In financial planning fixed annuities, fixed-indexed annuities, and variable annuities are used. Like any financial product, there are pros and cons to each type of annuity, and due diligence of investigating any annuity should take precedence before purchasing one for your retirement portfolio:
Annuities offer many benefits to investors and have their place in retirement planning. But only if suitable for the investor. And a part of an investment strategy using other types of investments and accounts. Investors should fully understand annuities and market risk, and the risks associated with annuities before purchasing them. If you have any questions about annuities, now is a great time to visit.
An annuity is intended to be a long-term, tax-deferred retirement vehicle. Earnings are taxable as ordinary income when distributed, and if withdrawn before age 59½, may be subject to a 10% federal tax penalty. If the annuity will fund an IRA or other tax-qualified plan, the tax deferral feature offers no additional value. Qualified distributions from a Roth IRA are generally excluded from gross income, but taxes and penalties may apply to non-qualified distributions. Consult a tax advisor for specific information.
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In addition Wendling Financial Group specializes in providing strategies and guidance for those who are seeking a better lifestyle in retirement. If you have retirement savings of five million dollars or $50,000, we can ensure it works as hard. As a result, we offer our experience and knowledge to help you design a custom strategy for financial independence. Contact us today to schedule an introductory meeting!