When you're planning for retirement, there are a lot of different options for building wealth for your golden years. These range from contributing to a 401(k) plan to investing in stocks. Annuities are another means of securing your financial future; they come with specific advantages, as the guide below explains.

What Are They?

Annuities are a type of insurance product that you can purchase to provide you with a steady amount of money, usually on a monthly basis. That stream of money, which you either begin collecting immediately or at some prespecified time in the future, is typically used in retirement to supplement other income.

What Are the Benefits?

By purchasing an annuity, you will lower the chances of outliving your money. You can buy one that keeps paying out each and every month for as long as you live, so this financial product is a valuable form of longevity protection for retirees.

The original investment is also tax-deferred, so you only pay taxes on it when you receive the money. Some types of annuities allow you to delay withdrawing money if you don't need it, which would also delay the corresponding tax bill.

What Are the Common Types of Annuities?

Deferred Income

With deferred income annuities, you typically agree to pay a lump sum now in exchange for monthly payments at some point in the future. For example, you can buy this financial product while you are young to guarantee regular checks after the age of 70 to provide peace of mind during retirement.

Immediate

If you don't want to wait to begin receiving the monthly payout, the other option is an immediate annuity. This is the most popular type, especially for married couples, as you can arrange for it to keep paying out for as long as either the husband or wife is alive.

Variable

Variable annuities are usually tied to the stock market and the amount of money you are eligible for fluctuates accordingly. However, there is usually a minimum return guarantee for those worried that the stock market will underperform.

Fixed

Instead of relying on stocks, this option comes with clear terms on the contract. Thus, you know exactly what you're getting when buying it. You can also defer fixed annuities, which can help you take advantage of their tax-deferred status.

If you are looking to purchase annuities, contact Doris Watson Insurance Agency in Broken Arrow, OK. As a State Farm® representative, she can offer an assortment of trusted insurance and financial solutions to meet your needs. Call (918) 251-4333 to set an appointment or visit her Facebook for more tips.