Annuities are sensible ways to plan for your future. They’re financial instruments you buy with today's dollars to pay out over time. If you’re unfamiliar with the concept, below is an introduction that will help you decide if this type of investment suits your circumstances. 

A Guide to Annuities 

How Do Annuities Work?

The purpose of an annuity is to provide you with a fixed income over a period of time, in most cases for the rest of your life, after an initial investment. It’s a method of retirement planning that helps ensure you don't run out of money before you pass on. There are many types, but most fall into two categories: immediate and deferred. With the former, you invest a single lump sum that pays you a fixed monthly return for the rest of your life. The latter option lets you gradually accrue funds in a set accumulation period. For both types, you generally must have reached age 59 1/2 before receiving payments, or you’ll face a tax penalty.

What Are the Benefits of Annuities?

Unlike 401(k)s and IRAs, annuities have no contribution limits. You can save as much money as you want and defer taxes until payout. In other words, the money you invest compounds annually without taxation. Also, depending on your specifications, you’ll receive a guaranteed income for the rest of your life. In certain cases, this type of investment even acts as a type of life insurance, as your beneficiaries can collect any unclaimed amounts or a guaranteed minimum. Finally, in Virginia and many other states, annuity contracts are protected against claims by creditors, making them effective asset protection tools.

To find out if annuities make sense for you, contact Nicole Gumm Groseclose Insurance Solutions in Clifton Forge, VA. Nicole has been serving Allegheny County clients for more than 16 years. With her financial and organizational acumen, she’ll help you build a clear and comprehensive plan for your financial future. In addition to annuities, she specializes in financial planning, life insurance, final expense coverage, and 401(k) rollovers. Visit her website to view location details and office hours or call (540) 968-1569 to request a quote.