Fixed annuities can be a top security asset for women for the simple reason that women typically live longer than men, therefore experience longer retirements and will benefit from having a constant, steady stream of income they can count on to be there until they pass away.
A 401k can be depleted if not used wisely in retirement. But by its design an annuity works a little differently. An annuity offers guaranteed income for life, if you choose it to work that way. And you invest money into it same as you would any other money market account, like a 401k.
The investment in an annuity offers different options. A deferred variable annuitiy is more aggressive and can offer higher return on your investment, but also you can incur loss. You still will received a fixed, steady stream of payments that you structure in a schedule ahead of time. But the money you have invested may take a hit in the market because of the aggressive nature of the investment. However, you can also win big.
A deferred fixed annuity offers a guaranteed rate of return for a concrete set amount of time. This is the option that you would look to if you wanted guaranteed payments until you pass away. However is less aggressive in the market and therefore your gains main not be as lucrative.
There are riders you can add to your annuity that offer a safety net for your original investment amount, of which the investing company will replenish your original investment amount should you lose any in the transactions of the trading for your annuity during a set term length, such as 10 years.
Another feature of an annuity is that the amount it accumulates and holds is tax-deferred, like a 401k. Meaning that your invested pool of annuity funds is not counted in your annual income amount. When you do receive the funds, however, those payments will be taxed like regular income. However, you can structure the amount you receive accordingly.
You choose the investment timeframe, lump sum or incremental investments. Plus you also choose the payment output schedule so that you can plan to have a steady, expected stream of cash up until the day you pass away. Then afterwards, if your annuity was designed to allow it, a beneficiary you have designated will resume receiving the payments you had been enjoying on the account.
It would be obvious then, that women who live longer than men, are ideal for an annuity-funded retirement. In fact, investors see this as true. New York Life see women, more often than men, enjoying fixed annuities and the security and long-term reliability they afford.
“Women are making a wise decision to actively ensure their retirement income needs are in place with a fixed annuity,” says Angela Kyle, senior vice president of the retirement income security division for New York Life.
Women make up the majority of fixed annuity customers with 64 percent of all clientele for the product in 2009, According to a report by.
These fixed annuities offer tax-free savings and a steady stream of income throughout the remainder of the policyholder’s life. Its benefits may also be designated to a beneficiary for a set period of years, according to the Insurance Information Institute.