An annuity, as the name suggests, is a fixed sum of money that is paid to a person every year, usually for the remainder of their life. A fixed annuity, on the other hand, is a bit different. This is a very particular type of annuity contract where capital is built on a tax-deferred basis. Once an investor such as yourself has provided that lump sum of capital to a life insurance company, that provider will then credit the annuity account with A) a guaranteed fixed interest rate and B) a guaranteed principal investment as well.
Whether you’re just trying to create a better financial future for yourself or you’ve begun to plan for your own retirement, there are a number of reasons why fixed annuities are absolutely worth your time.
Why You Should Care About Fixed Annuities
As is true with regular annuities, the major benefit of a fixed annuity is that it is a way to provide what is essentially a guaranteed form of income for the rest of your life – and a predictable one at that. Certain providers will also allow you to build in additional features like inflation protection (for a price, of course).
In a larger context, this makes fixed annuities an ideal choice for investors with a very low level of risk tolerance – which you would naturally have if your retirement date was sooner rather than later.
From a long-term perspective, fixed annuities are also a great way to make sure that you don’t have to worry about outliving your savings – or at least, this part. Remember that Americans are living longer every year due to advancements in medical technology and healthcare. It’s very difficult to know precisely how much you’ll need and how long you’ll need it for in retirement, but fixed annuities go a long way towards removing some of that guesswork.
Finally, fixed annuities are a very passive (read: maintenance-free)) form of investment. Once you set and agree to the terms, they’re essentially written in stone. You just sit back, relax and collect the agreed-upon amount of income for the rest of your life. If you’d like to find out more information about why making fixed annuities a core part of your larger investment strategy is such a good idea, or if you have any additional questions that you’d like to discuss in a one-on-one way, please don’t hesitate to contact Fortified Retirement today.
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