Chelsey Tucker graduated with a Bachelor of History degree from Metropolitan State University in 2019. She now writes about insurance with her specialty being life insurance and has been quoted on Help Smart Phone and MEL Magazine.

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Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years. He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like Reviews.com.

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Reviewed by Daniel Walker
Licensed Auto Insurance Agent

UPDATED: Mar 19, 2020

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The main benefits of an annuity are guaranteed income and tax benefits. More and more Americans are reaching retirement age every year.

With this omnipresent reality, the subject of thoughtful and effective retirement planning has never been more pressing. The benefits of an annuity make it a key component of many of these plans.

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In order to view the benefits of an annuity as part of a clear picture, you will need to compare the different options available to you. The on-line rate comparison tool available here will present you with the programs and rates offered by a variety of annuity providers.

Finding the structure and price that bests matches your needs will enable you to reap the most benefits of an annuity.

An annuity is an oft-used staple of retirement planning. It is built upon a contract between you and your insurance company that guarantees retirement income according to your specifications. Once you submit your contribution, you are entitled to make periodic withdrawals that will fund expenses all through your retirement.

An annuity comes in one of two forms: immediate or tax-deferred annuities. An immediate annuity begins when you make a single contribution to a fund from which you can immediately start making withdrawals. A tax deferred annuity is a good option for those further away from retirement as they make the wise decision to get their retirement ducks in a row early.

The tax deferred annuity grows over time from either a single contribution or payments made over the years. Taxes are assessed only when the money is withdrawn, and they are assessed on the interest, not the principal.

The Benefits of Guaranteed Income

The chief benefit of an annuity comes in the form of guaranteed income for your entire retirement. Without a regular check making its way into your bank account via your employer, the onus is on you to make sure you are able to make ends meet when you retire. An annuity provides you with the opportunity to withdraw steady income just like you did when you were working. The money that you pay into an annuity forms the basis of a contract that allows you the comfort and security that comes from a regular source of income.

The amount of each withdrawal you make from an annuity is determined by the:

  • Size of your initial payment
  • Specified rate of interest
  • The average life expectancy

This income is guaranteed for the duration of your retirement. There are also options available through which you can stipulate a lump sum refund that will go to your heirs when you die.

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Tax Benefits from an Annuity

When the tax man cometh, he can expect a more meager cut thanks to your annuity. The contribution you make to an annuity is tax deferred. You are expected to pay taxes on the interest from your investment (not the principal!) only when you withdraw funds from your annuity.

Because your contribution is not being taxed as it grows, it grows faster. And the taxes you do pay on the accrued interest are spread out according to your withdrawals, making it less of a hit on your wallet every year. The personalized nature of the annuity also gives you the luxury of planning your withdrawals in a way that will give you the most tax benefits.

Your Unique Retirement Plan

An annuity can be a full complement to pensions and Social Security payments. It is also much more personalized. You are able to control the amount of your contribution and the timing of withdrawals. There are no rules surrounding minimum or maximum contributions. With an annuity, you are in control of your retirement.

Find the Annuity that Benefits You Most

Use the annuity comparison tool found here to find the annuity with the most benefits for your situation. Simply type your zip code into the box on this page to bring up a range of options from reputable annuity providers across the US. The details and rates offered will help you locate the annuity that lends itself to your dreams for an ideal retirement. Don’t waste any more time. Build your retirement future today. Compare online annuity rate quotes now!