A deferred annuity allows you to conveniently build up your retirement income through a series of scheduled premium payments.
Your investment can protect your financial nest egg and supply lifetime income.
Below we explain what a deferred annuity is and how it might be the ideal investment vehicle you’ve been looking for.
Deferred vs. Immediate Annuity
Immediate annuities form through a single, one-time premium payment making all the benefits of the annuity immediately available.
Deferred annuities form over time through a series of scheduled premium payments. The benefits of the annuity defer to the future until the accumulation of all investment funds.
These two types of annuities serve different purposes. Immediate annuities are available to individuals that can make a large lump-sum investment or are rolling over another investment such as a 401k or IRA. However, few individuals have the financial means to invest in an immediate annuity. Deferred annuities are far more popular due to the convenience of loading the investment funds over time. This option allows you to build up your retirement income without stressing your monthly budget.
Benefits of Deferred Annuities
- Conveniently build up your investment over time – easy to budget for
- Option for lifetime income
- Flexible design and payout options to fit any retirement plan
- Fixed or variable interest rates
- Lots of companies to shop and compare your best options
Deferred Annuity Interest Rates
One of the best benefits of deferred annuities is the ability to choose the interest rate and risk level of your investment.
Fixed-rate deferred annuities provide a guaranteed rate of growth on your investment which is fixed and will never change. This option allows you to know exactly how much your investment will grow before ever making the annuity purchase. Additionally, fixed-rate annuities protect your investment from market exposure, therefore, they are one of the safest investments for your retirement nest egg.
Variable-rate deferred annuities offer a variable rate of return based on market performance. This option provides the opportunity for higher yields; however, it also carries the risk of no growth and even of potential loss of principle.
Deciding which interest rate is best for you depends on your life circumstances. Variable annuities can help you catch up if you’re behind on your retirement savings. Fixed-rate annuities provide protection and a conservative rate of growth.
Deferred Annuity Investments Are On The Rise
Annuity investments continue to gain popularity due to the uncertainty of global events.
Limra, a worldwide financial research organization, showed that Deferred Income Annuities increased by 34% from 2017 to 2019. Additionally, the fourth quarter of 2019 grew by 20%. The growth rate for annuity investments is staggering.
Why are annuity investments becoming so popular?
Two words, financial protection.
Traditionally, investors use stocks and money markets when looking for retirement investment growth. However, after the crash of 2008 millions of Americans have soured on the idea of losing investment principle and have turned to more conservative investment vehicles.
Traditionally, Bonds and CDs have been the go-to low-risk investment; however, these vehicles frequently fail to outpace inflation, which also puts your money at risk.
Annuity investments continue to gain popularity because they offer protection from market exposure and provide guaranteed moderate growth far better than Bonds or CDs.
Shopping Your Options
The insurance market is extremely competitive. For consumers, this is a thing. There are dozens of insurance carriers selling deferred annuities. The challenge arises in finding your best option. Fortunately, independent insurance agencies like our exist to help you shop and compare your many annuity options.
The biggest thing to look for when shopping for an annuity is which carrier can offer you the best interest rate. For the interest rate directly affects the amount of income your annuity supplies.
Our team of independent agents is here to help you shop and compare the best deferred annuity products on the market. We’ll help you find the best interest rate and the most convenient options to match your unique life circumstances.
We’ve helped thousands of people generate more income throughout retirement. We’d love to help you too! Our services are free. And there’s never any obligation when speaking with an agent.
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