An investment in annuities is fraught with several advantages that may attract several investors. Those looking for a steady and predictable income stream in retirement can opt for a variable annuity. From successful delivery of financial security, and tax advantages to a host of options tailored to meet the requirements of every individual, there are several opportunities annuities can offer. Here are some of the key benefits that an investment in an annuity confers on an investor.
Lower Investment Management
Investing in annuities can be right for those investors who are hands-off. Provided you make an upfront investment decision, the insurance company may manage the money and formulate an investment strategy to distribute your payments. This would indeed make it easier on your financial planning side.
Personalization options
From fixed, and variable to indexed annuities, most of the policies have very awesome features backing them. This, therefore, will allow you to get the annuity that best fits your goals, risk tolerance, and retirement plans. On the other side, variable annuities allow you to invest in a variety of subaccounts that may promise bigger returns even though they come with greater associated risk. In other words, an investment in annuities provides stable, predictable income for investors.
Inflation Protection
Many annuities offer protection against inflation. For such annuities, with increasing inflation, the income payment is correspondingly adjusted to retain purchasing power so that one is not hit by rising prices and their standard of living remains intact.
Protection from Market Volatility
Among the annuity products available, some can protect one against market ups and downs. Some annuity products guarantee a rate of return unrelated to market performance, which probably is most appealing to more investors or those near retirement age. This also makes it an ideal option for those who do not want to bear the risks associated with fluctuating market conditions.
Death Benefits
A great number of variable annuity include death benefit provisions. This makes them very attractive to those concerned about leaving a financial heritage behind. In the case that the annuitant passes away, the beneficiary may receive the remaining value of the annuity. The beneficiaries are also guaranteed a minimum amount. Therefore this option leaves investors being assured that their loved ones will be well taken care of.
Longevity insurance
Annuities can introduce very valuable longevity insurance by continuing payments throughout the remainder of one’s life. For instance, individuals outliving their expectations can find this true, as the income stream will not be affected by how long one lives and reduces the risk of running out of retirement savings.
Guaranteed Income Stream
One of the greatest advantages of annuities probably is that they provide an income guarantee. The idea that created annuities was to provide an investor with a continuous flow of income for either a certain period or not throughout their lifetime. This is especially important for retirees who need to make sure that they have a steady income on which to live.
Although annuities are not for everyone, variable annuities may prove to be of great utility within a diversified retirement strategy. Annuities provide investors with the promise of future financial security, which eases their minds.
