find a local Fiduciary Advisor in

 north carolina

Why Annuities Should Be Part of Your Retirement Plan

As you near retirement, you are probably thinking about where your income is going to come from when your paychecks stop. Some people plan to rely on their 401K or pension, while others choose to plan ahead with their IRA. When it comes to thinking about your retirement, there are many options that will generate cash flow. What are annuities and who should take advantage of them?

What is an annuity?

Depending on where you look, you will find different definitions of what an annuity is. To set the record straight, Annuities are a type of investment vehicle that recreate the income that once was your paycheck. In fact the most common annuity is Social Security. You pay into Social Security your entire life, and during retirement you get a fixed sum of money each month.

Who should leverage annuities in retirement?

In North Carolina, you are eligible to put up to $5,500 annually into an IRA ($6,500 if you are 50 or older); as well as, $18,000 annually into your 401k. If you have maxed out your contributions to your 401k, IRA, and other tax-deferred or exempt accounts, it may now be time to consider investing in annuities. If you have additional capital to set aside for retirement, annuities are a great option to help you save on taxes. This may not be for everyone but it's a good strategy.

4 Types of Annuities

There are many different types of annuities. These are just some of the many different forms an annuity you can invest in. Different retirement plans combine these annuities differently depending on the needs and goals of the individual.

Immediate Annuities

An advantage of immediate annuities payouts typically begin one month after the account is opened. These types of accounts are great if you are just about to retire. Immediate annuities frequently payout monthly; however, it is posible to adjust the schedule to your needs.

Deferred Annuities

A deffered annuity is a taxed-deferred account that can grow until you withdraw the funds. Once you withdraw, returns are taxed as ordinary income. The benefit of this type of account is it continues to earn returns even after it begins paying out. It is similar to an IRA or 401k.

Fixed Annuities

With a fixed annuity, you will receive a set payment each month regardless of how the market is doing.

Variable Annuities

Depending on how the market is doing, a variable annuity will payout more or less than average. The amount you receive is co-dependent upon the market at the time.

Best Ways to Leverage an Annuity

One of the best way to utilize an annuity is to cover your income gap in retirement. Your income gap is the difference between the fixed money you receive such as pensions, social security, and other forms of income and your monthly budget. The extra cash will allow you to take care of your monthly expenses without spending savings.

What kind of fees are there with annuities?

Annuity fees will vary based on the type of account. If you are considering an annuity, we encourage you to reach out to a fiduciary advisor, whom by law has your best interest in mind. We can help you by matching you with the right advisor. Simply click "Find Match" go through the questions and recieve your match instantly!

Reaching Financial Freedom

Achieving financial freedom in retirement is not as easy as it once was. To do it, takes careful planning. We want to make sure you reach your goals and enjoy the retirement you want. (read more)

4 Types of People Who Need Income Allocation

Everyone wants to enjoy life in retirement and an income allocation plan is the best way to make that happen. But the reality is many people face the challenge of not having enough in the bank to live comfortably from. (read more)

Why Income Allocation Works

As we go throughout our careers, the goal is to always have a steady paycheck, to have our income streams increase, and work towards a successful retirement. But what happens when we reach retirement and that steady income stream is no longer there? (read more)