In this troubled economy, it is even more important than ever to be prepared for retirement. Many retirees, or those approaching retirement age, have found that their investments took a significant hit during the financial downturn in recent years and are seeking ways to insure income. There are several low-cost, secure investments for retirement income virginia beach.
One such investment vehicle to consider is a single premium immediate annuity (SPIA). This is an attractive, low-risk tool for retirement income for several reasons:
Unlike some other retirement options, SPIA payments will not change, either in the dollar amount or the frequency in which they are paid.
A SPIA is guaranteed for life. In other words, and unlike other retirement accounts, you cannot outlive a SPIA.
In some cases an investor may receive a larger amount of income than other, low-risk, fixed-income investments such as Municipal Bonds and Treasuries.
SPIAs also may be more attractive from a tax standpoint as the amount is paid over time rather than in a lump sum.
Another option, for those less adverse to risk and who would like more return on their investment, is the variable annuity. The variable annuity has some advantages over the SPIA, such as:
The ability to choose from a wide range of stock or bond portfolios called subaccounts.
Variable annuities are focused on giving you a chance at long-term capital growth.
Like fixed annuities, variable annuities are also tax-deferred vehicles.
As these vehicles are growth-focused, there may be a better chance at protecting against inflation.
There are, however, some downsides to choosing a variable annuity over a SPIA:
There is greater investment risk, so the regular payouts may be less than other annuities like the SPIA.
Fees charged for variable annuities are often greater than other types and may be considerably more than regular, no load mutual funds.
The tax considerations are more serious with a variable annuity. In addition to the early withdrawal penalties common to most annuities, long-term capital gains are taxed at ordinary income tax rates upon withdrawal. This may be particularly concerning to higher income investors.
There are several other types of annuities available, but the single premium immediate annuity (SPIA) and variable annuities are both attractive options to those seeking income in their retirement years.
