Annuity Rates-Which Options are Best?
The process of comparing annuity rates can be confusing. One of the reasons that many people in Philadelphia find it so confusing to compare rates when shopping for annuities is the fact that there are different types of annuities and each type offers different rates. The first step in comparing annuity rates is to understand the differences between the two basic types of annuities.
An immediate annuity allows you to begin receiving payments within the first twelve months after you purchase the annuity. With this type of annuity you can choose whether you wish to receive income for your lifetime or only within a specified number of years.
A deferred annuity features two phases. They are an accumulation phase and a payout phase. During the accumulation phase, your money is allowed to grow at a tax-deferred rate until such time as you take it out o the annuity. Most people elect to begin taking money out of deferred annuities when they retire. Payout options for this type of annuity include taking the money out in a single lump sum, taking out multiple withdrawals at various times or converting the annuity to a regular income stream. If you plan to move away from Philadelphia to a warmer climate and purchase a vacation home, you may consider a complete cash-out. If you are looking for steady income to fund your retirement years; however, converting the annuity to an income stream might work best for you.
When choosing between immediate annuities and deferred annuities, it is important to recognize that immediate annuities will often offer you the best annuity rates. Of course, the fact that a tax deferred annuity allows you to grow your money without paying taxes until you make a withdrawal can also be quite attractive.
Ultimately, the decision as to which type of annuity is best for you may hinge on your purpose for purchasing the annuity. Many people find that investing in tax deferred annuities offers better rates than investing in CDs or savings accounts. This option is great for people in Philadelphia who want to accumulate a single lump sum which they plan to withdraw when they retire or at some other point in their life.
On the other hand, if your interest is more along the lines of building an investment that will provide you with a solid income during your retirement years, then you may wish to choose either an immediate annuity or a deferred annuity that you can convert to an income stream.
Are you ready for more information on Annuities quotes? How would you like to proceed?
Newsletter Signup
