What are the Benefits of Annuities?


Annuities are a common financial product that offers consumers the chance to put money away. Whether you’re saving for retirement, approaching retirement, or living in retirement, an annuity can be beneficial to you. 

What Is An Annuity?

An annuity is an insurance contract issued by a financial institution that agrees to pay out invested funds in a fixed income stream in the future. Investors can purchase an annuity using monthly premiums or a lump-sum payment. After the payments are made, the financial institution pays out a stream of payments for a specified period of time. Sometimes, annuities pay the policyholder for the remainder of their lives. 

Annuities are primarily used for retirement purposes. Though, there are other use cases for annuities. 

What Benefits Do Annuities Have

Annuities provide a steady cash flow to the policyholder at a later date. This can be great if you are concerned about outliving your savings. The best thing about annuities is that they provide stable, guaranteed income that can be spent on anything. 

Annuities are also tax-deferred, meaning you can build this asset without paying taxes upfront. Instead, you are taxed upon withdrawal. If you wait until retirement to receive payments, this allows you to avoid paying the income tax rate you’d pay if you received the income stream while working. 

There are other benefits that are specific to each different type of annuity. Here are some more details. 

Deferred Variable Annuities

Deferred variable annuities include funds that have potential for investment growth. Though, they do involve some market risks that can result in losses. Fortunately, deferred variable annuities sometimes allow you to protect your investment against loss while participating in potential market growth. 

Deferred Fixed Annuities

With a deferred fixed annuity, you are provided a guaranteed rate of return on your investment for a set number of years. This is ideal if you are a more conservative investor because you are more protected from market volatility. 

Secure Your Future With An Annuity

If you are concerned about outliving your savings, an annuity may be the solution. To find out if annuity products are right for you, contact Carolina Senior Benefits. We’ll help you determine what the best option is. 

You can reach us by calling 704-765-4689.