So you’re looking to start saving for retirement, but you aren’t sure where to start and what to do. Buying an annuity can be a great benefit for you and your loved ones. Annuity owners generally demonstrate a unique loyalty and commitment to their annuities, with 93% stating they still own their first one. Here is a brief background about annuities and how they work.
What Are Annuities? An annuity is an insurance product that provides long-term income support via a stream of payments. People are typing buying annuities to help manage their income in their retirement years. These insurance products preserve retirement money and grow with long-term, tax-deferred savings. Once you have hit a certain age — usually 60 years old — you can access your annuity and start receiving income payments.
It is important to note that sometimes people run into financial difficulties before they have reached the payout period, and you may decide to sell your annuity and access it’s funds early. Variable annuities, for example, may not be suitable for meeting short-term goals because taxes and insurance company fees may apply if you withdraw your money too early.
How Do I Sell My Annuity? First off, there is no problem with selling your annuity if you are strapped for cash. Many people will advise against this, but it is better to access your annuity than putting your entire life on hold as you find cash by other means. Some reasons for receiving an annuity lump sum payment are as follows:
- Buying or repairing your home
- Paying for a college education
- Starting or investing in a business
- Paying off debt
- Paying for a divorce
- Investing in property or stocks
There are many other reasons for selling, but these are the most common reasons people usually sell their annuity — and you have plenty of selling options as well:
- Partial This is when you only sell a portion of your annuity; you will continue to receive periodic payments, but they may be lower than they would have been. Tax-free benefits also still apply.
- Entirely Selling your entire annuity means you will empty your investment account all at once and will not receive any periodic payments in the future. However, you will have a tidy sum of cash.
- Lump Sum Once you receive a lump sum, you can sell these over time and receive money in large increments, which guarantees you a stead flow of income.
Everyone has different investment strategies, and you should consult your investment company about looking into annuities in order to secure your future.