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When it comes to preparing for retirement, you likely already have a 401(k), IRA, or other retirement savings account in place. However, saving for your future is not the only way to guarantee income throughout your retirement years. After all, pensions are becoming rarer as time goes on and fewer employers are even offering retirement benefits. For some people, purchasing an annuity from your insurance agency will give you access to steady and predictable income once you exit the workforce. Here’s what you need to know.

What Is an Annuity?

Insurance AgencyAn annuity is a type of insurance policy purchased through an insurance agency that provides you with money over a fixed period after the investment matures. Immediate annuities start making payments to you after you purchase the policy with a single lump-sum payment. Deferred policies pay you in the future. Deferred policies use your money to invest in the annuity’s funds, growing your future payments over time.

Within the immediate and deferred policies, you’ll also need to choose between fixed and variable rate annuities. Fixed rate policies pay you a predictable amount each year that never changes over the life of the annuity. Variable rate options have payouts that fluctuate with the overall performance of the underlying investments making up the annuity. Though fixed rate options may seem convenient, they come at a risk for potentially lower payouts. After all, if the underlying investments grow significantly, your payouts will stay the same. With a variable rate, your payouts may decrease if the market underperforms, but they may also increase if the investments grow.

Is It Right for You?

If you’re looking for a way to increase your retirement income without having to re-enter the workforce, an annuity may be a fantastic option for your needs. However, if you’re worried about having your money locked into an investment without any way of getting it back except through the outlined payouts, you may want to look into other options. Speak with your insurance agent about your particular situation before making a decision.

 

Interested in learning more about annuities or want to invest in your retirement now? Contact the agents at Albers Insurance Agency in Cincinnati, OH. As a family-owned insurance agency, they pride themselves on getting to know their clients, so you can rest assured that you have the best coverage for your needs. Learn more about their coverage areas online and call (513) 891-3304 to schedule a consultation to find the best annuity, health, or life insurance policy for your family.

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