Retirement Insurance Company

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Retirement Insurance Company
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Annuities as an Investment For Retirement
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• As a retirement-planning tool, an annuity is a
  contract between you and an insurance company for
  guaranteed interest and income payments. During
  the accumulation phase, the investor makes
  payments to the issuing company, which will
  eventually be given back to the investor with
  added interest during the distribution phase, or
  annuity period. The accumulation phase can last
  from as long as one day to several decades,
  depending on the size and frequency of payments.
  While most investors make payments over long
  periods of time, an investor could choose to make
  a single lump sum payment both methods will
  result in future payments that include interest.

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• The insurance company will then take the
  contributions, whether it was a lump sum payment
  or many dispersed payments, and invest it
  accordingly. The distribution phase begins when
  contributions stop and you start receiving
  annuity payments, this is when the annuity is
  said to be annuitizing. Distributions can be made
  to you as a lump sum or through regular
  distributions over time. Once contributions are
  being distributed, you cannot withdraw any of the
  funds, and you receive funds according to the
  distribution schedule agreed upon. Annuities also
  provide tax benefits to investors by deferring
  the taxes paid on the earned interest.

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• Annuities are not for everyone. They are
  generally overpriced, they limit the owner's
  investment choices, and they lack liquidity. We
  recommend annuities only for people that fit the
  following guidelines If you plan to keep the
  annuity for at least 15 years, whether you make
  one lump sum payment or periodic payments over
  this time.
• If you are currently in a high tax bracket and
  expect to be in a lower income tax bracket
  in retirement
• If you do not need distributions until age 59 1/2
• If you do not have heirs (because they will have
  to pay ordinary income taxes on any appreciation)
• If you want a guaranteed income for life in
  retirement

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Purchasing

• Annuities can be purchased through the immediate
  payment, single payment deferred, or periodic
  payment deferred methods.Under the immediate
  payment method, you give the Retirement insurance
  company one lump sum payment. This is an option
  often used by people who are close to retirement
  and want to get payments immediately, usually, 30
  days after the payment is made.In the single
  payment deferred method, you make a lump sump
  payment but payouts do not start until sometime
  in the future. This option is usually used when
  you have enough money to put away, have several
  years until retirement, and you want your money
  to accumulate earnings for that deferral time.

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Fixed Annuities

• A fixed annuity provides you with pre-determined
  monthly distributions starting on a specific
  date. The insurance company invests the money and
  agrees to make the payments in the future.
  Investors choose fixed annuities to provide them
  with a steady source of future income. But your
  "guaranteed return" will be affected by
  inflation. Distributions can be increased by 3
  to 5 each year (fee involved) and can last for a
  fixed period or for life.

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Some more points on Annuities as an Investment

• Equity-indexed annuity
• Taxes and Distributions/Payments
• Fees
• GICs
• Source http//www.investorguide.com/article/11702
  /annuities-as-an-investment-for-retirement-igu/

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