Ready for some retirement planning? Have you considered annuities as a source of retirement income? Whether or not the answer is yes, we still think it’s crucial to lay down some information about annuities that you may not know!
Yes, even the most careful retirement planners may have missed some of these important points about annuities. It’s our job to shed some light on them and untangle the more complicated aspects for you!
So, if you want to make sure that your retirement planning goes without a hitch, read on and find out everything you need to know about annuities- some of these things might surprise you.
Consider How Annuities Can Affect Your Taxes
Not enough people consider what it means to plan their savings, contributions to savings, and retirement distributions around taxes. But not doing so could truly hinder your finances. This is also why, we think, people don’t consider annuities as tax-planning tools, either.
They’re a tax-advantaged way of saving for retirement because the money you deposit is tax-deferred until you withdraw it, allowing your savings to compound faster.
Here’s how deferred annuities work and how they can help you. They have two phases. The accumulation phase allows your money to grow for a period of time, followed by the payout phase, where you can either withdraw money as a series of payments or as a lump sum.
Your choice as to when to take income from your annuity affects when you’ll pay taxes. If you start taking withdrawals in retirement you might be in a lower tax bracket. This, combined with the added benefit of relying on compound interest, make annuities worthwhile for your retirement.