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Show V:ulti-facited benefits of annuities By PAMELA NICHOLS Financial Consultant Many financial consultants rec-mend rec-mend tax-deferred annuities to its as an efficient way to max-ze max-ze wealth-building opportunities j reach long-term financial goals h as planning for your children's ;.-ge education or a comfortable re men t And, considering that it s 75-80 percent of pre-:ment pre-:ment income to meet post--ment needs and that college n may cost as much as your i home, the earlier you start rung, the better. ' nnuities are fast becoming an native to taxable savings plans. ii the annuity, money grows kly because earnings in the ity accrue on a tax-deferred, .unded basis. By deferring in-e in-e taxes, you achieve your long-n long-n eoals more quickly and effec- In addition to the benefits derived n the annuity's tax-favored is, flexibility is another impor-i impor-i feature. Depending on the type , nuity you select, you may have Soice of how your money is managed. For example, a fixed-rate annuity offers the assurance that over the years, even if interest rates fall, the issuing insurance company guarantees your return of premium, a minimum interest rate, and lifetime annuity income payments. MAXIMIZE RETURNS Individuals who are willing to assume a little more risk for potentially poten-tially higher returns should consider another type, the variable annuity. With the variable annuity, you may allocate your money among various portfolios, such as equities, bonds or government securities, just like mutual funds. Plus, you may transfer among these portfolios without charge or tax consequence. Variable annuities give you the opportunity op-portunity to maximize returns. However, performance is not guaranteed guar-anteed nor is your original investment. in-vestment. Annuities can even help increase your retirement income or allow you to retire early. How? Through the power of triple tax-deferred compounding, you earn interest on the principal amount, interest on interest, in-terest, and interest on money that would ordinarily be lost to taxes. For example, if you invested $100,000 in a local savings bank for 15 years versus investing that amount in a tax-deferred annuity for the same length of time, upon retirement you would receive almost $8,000 more per year from the tax-deferred annuity (assuming a rate of 8 percent and a 33 percent tax bracket). Why? Because you realize interest on earnings that ordinarily or-dinarily would have been paid in taxes. An annuity also offers a special benefit that distinguishes it from most other investments. In the event of death, your beneficiaries can be assured that they will get at least your initial investment, assuming you had not made withdrawals or begun taking your payments. This is known as a minimum death benefit guarantee which is guaranteed guar-anteed by the issuing insurance company. Because of their flexibility and tax advantages, annuities are ideal savings programs. If you are serious about achieving your future financial finan-cial goals, then there is an annuity that is right for you. |