The Importance of Comparing Annuity Rates

There are many different types of annuities. There are fixed annuities, variable annuities, single-payment annuities, flexible payment annuities, immediate annuities and deferred annuities. With all these different choices, it's no wonder many people have trouble deciding which type is right for them. Even if you have a good idea as to which type of annuity you want, it's very important to compare rates to ensure you get the highest income possible when you are ready to retire.

Annuities are long-term in nature, which is why you should always consult with an experienced professional before investing your money in any type of annuity fund. The first step and one of the most important is to find a financial advisor you can trust to guide you in the right direction. Once you do that, then it's time to do a little research. By researching different rates, you will be better equipped to decide which annuity is best for your financial needs.

Annuities can be combined to provide you with the best options and rates for you. There are annuities that offer an income for the remainder of your life, joint and survivor options, and options that provide your beneficiaries with remaining payments for a specified period of time following your death. All of these options and more can be explained to you in detail by your financial advisor.

Another thing to consider with annuities are tax issues. The money contributed to an annuity fund can be after tax, which means there are no limits on how much you can put in. You will, however, want to also contribute as much as you are allowed to a pre-tax retirement fund before putting any post-tax income into an annuity fund. If you are using your annuity to fund your retirement, you will find that there are some limits. Most of the time, federal tax law states you must begin receiving minimum payments by the first of April after you turn 70 years of age.

Comparing annuity rates can help you make the most of your tax dollars. Earnings from annuity funding are taxed just like regular income. If your income rate when you retire is higher than the capital gains rates on any of your other investments, you will end up paying more in taxes. The good thing is that you can receive tax deferral on your earnings. Other investments may be subject to not only ordinary tax but capital gain tax as well. This is applicable even if the investment has not been cashed in.

Before making any decisions regarding annuities, explore all your options and learn as much as you can. Make sure you compare rates from various annuities and consult with an experienced and trusted financial advisor. An annuity fund is a long-term financial transaction that will affect you for the rest of your life, so choose wisely!

Copyright 2007 Jim Sterling - All Rights Reserved





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