Why annuities might be beneficial for you?
If you are planning for retirement years, this is a good time to think about annuities.
06:22 22 December 2013
There are an increasing number of options for retirement, and one of the more familiar options is an annuity. Purchased Life Annuities (PLAs) will not give you money to pass onto your loved ones, but they can help you ensure that you have an income while you are alive.
PLAs provide a stable income for your entire life, regardless of the number of years you live. In addition to the stable income for life, there are other advantages that make this option attractive:
- Taxes—one of the benefits of receiving payments from an annuity is that some of the money is not taxed. The government assumes that the money you used to purchase the annuity was already taxed once and therefore does not take a portion of the payment you receive.
- Risk—since annuities are purchased with one lump sum, there is virtually no risk involved with an annuity. When you purchase the annuity, you will already know roughly how much money you can expect.
- Security—once an annuity is purchased the money cannot be removed. This ensures that your income for retirement years is secure and that you will not be tempted to use those funds for something else. By removing the option, annuities effectively secure funds for your future.
- Options—annuities offer multiple options so you can purchase annuities with smaller lump sums, or with larger ones.
If you would rather be able to access your funds if something unexpected comes up, or you just are not sure whether or not you want to go with an annuity, consult a financial advisor first. You can also opt for drawdown, which you can then change in the future to an annuity if you prefer. The main benefit of the Purchased Life Annuities is the guaranteed income for your entire life, regardless of age.