Annuities can provide a valuable source of income in retirement, helping you plan for your financial future with greater certainty and peace of mind. An annuity is a financial product that pays out a fixed or variable stream of income, typically over a set period of time. This can be an attractive option for retirees who want to secure a steady income stream without the volatility of other investments.
There are several types of annuities available, including fixed, variable, and indexed annuities. A fixed annuity pays a guaranteed interest rate, while a variable annuity allows your money to be invested in a range of funds, providing the potential for higher returns but also subjecting your investment to market risk. An indexed annuity offers the potential for higher returns by linking the interest rate to the performance of a specific market index, such as the S&P 500.
Annuities also offer tax advantages. Your contributions to an annuity are made with after-tax dollars, and the earnings on those contributions grow tax-deferred. This means you won’t pay taxes on the growth of your investment until you start taking withdrawals. Additionally, some annuities offer tax-free income, allowing you to receive income payments without having to pay taxes on them.
When considering whether annuities are the right choice for your retirement savings, it’s important to have a good financial partner who can help you understand your options and make an informed decision. At Live Oak Wealth, we have a team of experienced financial advisors who are dedicated to helping our clients plan for their retirement and secure their financial future. Contact us today to learn more about how annuities can fit into your retirement planning.
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