What You Need to Know About Annuities

By: Tony Torbey

The Basic Information about Annuities
Many financial professionals tell us that annuities are a great investment. The problem…not many people know what an annuity is or how it works. Here we will explore the basics of annuities that will help you to determine whether or not you are interested in this type of investment. After reading this, you may still have questions. Call us today to discuss retirement planning in Rockford.

Should I Consider an Annuity?
There are two main reasons why individuals choose to invest in annuities:

1. While saving for retirement, individuals will often purchase annuities as a way to defer taxes. This may enable them to save more money than they would be able to with a taxable investment, such as a mutual fund. For those who are saving for their golden years, especially if you have already exhausted other investments like 403(b)s, 401(k)s and IRAs, annuities may be an ideal investment. These are especially appropriate for long-term investments.
2. Once the individual has retired, having an annuity can help them to generate a monthly income to live on. With human life expectancy increases from medical advances, retirement plans aren’t lasting as long as they need to, making annuities an appealing option to generate income.

Retirement in Rockford by The SAIL Group Inc.

Variable versus Fixed Annuities
Annuities are available as variable or fixed – this is where many investors become confused. Fixed annuities are usually associated with the payout phase while variable annuities are associated with the savings phase. With that being said, both types of annuities can be used to help save for retirement and both can be used to help generate a monthly income. The main difference is that a variable annuity’s payout will vary depending on investment returns while a fixed annuity will provide a fixed payment.

Still Confused?
This is a very basic explanation of what an annuity is and how individuals can use it as part of their financial profile. If you are still confused or considering investing in an annuity or would like to learn about retirement planning in Rockford, it may be beneficial to speak with a financial planner to see what options are available and receive a full explanation. Remember, we are here to help!

The SAIL Group Inc.
5301 E State St #106
Rockford, IL 61108
(815) 282-3480