Trying to stabilize a situation through investing can be challenging. Many people use annuities to fill this role. If you're considering setting one up, it's wise to ask about annuity planning services. An advisor can help you set up an annuity to pursue one of the following five objectives.
One common reason for an annuity is to guarantee an income stream. You might be worried about unstable income from more aggressive investments, for example. If you collect some major gains from investments like stocks or cryptocurrencies, you may want to take some of your profits off the table. You can then convert those profits into a protected stream of income while you continue to make more aggressive investments.
People also set up annuities if they're worried about long-term income from their jobs. Someone who works in a high-risk industry, such as offshore oil drilling, might talk with an annuity advisor to create an income stream to guard against industry downturns or even physical injury.
Deferring Taxes on Investment Growth
There are often tax-deferred structures on annuities. However, you can't just purchase an annuity and expect the tax benefits to kick in. The government generally favors annuities in retirement accounts. An advisor can tell you which types are likely to yield the most tax benefits.
Long-Term Care Expenses
If you're worried about a loved one, you might configure an annuity to handle their long-term care expenses. You will need to plan for inflation, though, so it's a good idea to discuss how much growth the annuity will need to keep up. However, an annuity can be a good way to financially look out for a person who has medical or mental issues.
Annuities are excellent retirement planning tools for people who are worried they might outlive their savings. They offer investment growth opportunities while guaranteeing income. A properly planned annuity can supplement other retirement income streams like Social Security and 401k withdrawals. However, you should consult with an annuity planning services provider to ensure the structure won't accidentally incur a larger tax bill.
Protection from Bankruptcy and Judgments
Not all annuities are protected from bankruptcies or civil legal judgments. However, many annuities within retirement accounts are. Likewise, some states have laws that offer at least some protection to non-qualified annuities. Always talk with an annuity advisor, though, before selecting a product to guard against the possibility of a bankruptcy filing or civil suit.
For more information, contact a company like Annuity Depot.Share