Common Benefits with Annuities

All annuities, fixed or variable, share several common benefits. Here's a summary of what annuities can bring to your retirement portfolio:

Ideal for Estate Planning

Proceeds from annuities pass directly to your beneficiaries without the delay, expense, and publicity of probate in most states. If you've ever had a loved one's estate go through this time-consuming legal process, you know just what kind of advantage this is.

The Power of Tax Deferral

Because you do not pay taxes on earnings every year, your annuity is able to work harder thanks to tax-deferral. You will have to pay taxes on earnings when you withdraw your annuity's gains, but at least you can decide when that happens.

No Contribution Limits

Contributions to other retirement savings vehicles, like 401(k)s and Individual Retirement Accounts, are strictly limited. Annuities, however, offer tremendous flexibility. You can contribute as much as you want, up to the limits imposed by the insurer, to take advantage of tax-deferral or variable accounts inside the annuity. Plus, you can add to your annuity contract at any time.

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Flexible Payment Options

Unlike 401(k)s and IRAs, which require that you begin making withdrawals at age 70 1/2, you may be able to wait much longer with annuities. When you do decide to begin receiving payments, you can usually select one of the following methods:

• Lump Sum distribution (a one-time payment)
• Periodic distributions (you can take money only when you need it)
• Systematic distributions (a fixed or variable amount is sent to you at regular intervals)
• Annuitization (fixed or variable payments, guaranteed for the rest of your life)