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Micky Gramlin
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Micky Gramlin   My Press Releases

Residual Income Series, Annuities Continued Pros and Cons: Series 9

Published on 8/11/2018
For additional information  Click Here

 

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The value of achievement lies in the achieving”

~ Albert Einstein

 

Once again, let me clarify that I am not a financial guru and not suggesting a definite investment plan for residual income or retirement income. I am looking at options for myself and sharing this information with you. As always, discuss any investment with a financial advisor.” Micky G

An annuity is an insurance product that pays out income. You make an investment in the annuity and then it makes payments to you, giving you a dependable income stream during retirement.”  

This statement works for the Fixed Annuity, but for a Variable, caution must be exercised. Depending on market conditions, the result could be positive or could be negative with a variable.

One of the biggest fears of retiring, is to run out of money. And, let’s face it … unfortunately, life is much different when you are broke. When you become dependent on someone to just take care of your basic needs, freedom of choice may evaporate.

“However, if you buy the right annuity for your needs and can afford to buy enough income to cover all necessary expenses, then your chances of not being able to fund your life into a very old age are greatly diminished.”

 

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The Pros and Cons

 

PROS

For those that are not able or willing to risk their monies, there are some benefits over other kinds of investments when it comes to an annuity

 

  • Your Principal Is Protected – One of the best features of fixed annuity is that the value of the annuity can be guaranteed to be at or above the amount invested. You or your loved ones will receive at least as much money as you invested in the annuity.
  • You Can Create A Stream Of Steady Income
  • Tax Benefits – With the purchase of an annuity with qualified retirement savings, such as a 401k or an IRA, you can save money on taxes when taking a lump sum payment. You can roll-over qualified funds into a qualified annuity without any penalty. You do pay taxes on the income the annuity provides.
  • Inflation? – This is an option that you can add on when you buy an annuity. No one knows what is ahead in the future. Inflation can have an effect on your assets and I personally may “consider” adding on to a long term annuity that I may be purchasing for retirement purposes.
  • Annuities do provide predictability.   

CONS

  • Know The Different Types Of Annuities – Some view annuities, such as fixed annuities, as being an ideal solution to a retiree’s need for guaranteed income. Fixed annuities have a very good reputation.

 

Other annuities are viewed as “snake oil”. As an unnecessary and expensive product. Once again, for myself, I would only consider a fixed annuity. “It is very important that you understand the various features and terms that are applied to annuities.”

  • Avoid High Costs: Management fees are a common complaint about annuities. “ When purchasing an annuity, it is recommended that you shop around and really know exactly what you are paying for.” It is well worth your time to do so and to explore all of your options
  • Expect A Lower Return – In return for the retirement income certainty provided by fixed annuities or equity indexed annuities you forgo the opportunity to make bigger returns by investing your money in assets that fluctuate in value, like stocks.

“A fixed annuity is considered to be a safe and conservative investment but this means that you will not see the possible gains (and losses) of a riskier investment – like the stock market.”

  • Annuities Are Not Flexible – Once you purchase, your capital is tied up and only with a high penalty can you access your money.

 

  • Because annuities are designed to provide steady income over time, they are not suited to or recommended to cover large unplanned expenses.

In summary, an annuity could be a great way to protect your quality of life in retirement. And, your retirement assets could be sufficiently used to purchase a guaranteed income to last as long as you.

Best of all, you at least have the option to buy protection from inflation and other financial woes.

One thing to remember, is that the rules of the financial world can suddenly change, or perhaps, they have changed already. Never assume the information you have is correct and current. Always verify.

Be sure to work with someone licensed in that field or with the proper valid credentials. For example, I was licensed to sell life insurance but had valid certificates showing that I had completed the necessary courses to advise and sell for estate planning, annuities and so on

If you don’t understand, then don’t sign anything.

When these two words are mentioned, no matter what the circumstances are … stop, listen and pay close attention, ‘Irreversible and Variable”

 

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Note: I don't sell life insurance or any life insurance products. Nor am I in the business to promote or to collect for any life insurance product, no company or from an indepemdent agent.

Thank you for stopping by!

Micky Gramlin

 

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Source

newretirement.com

kiplinger.com

 

 

 

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