Advantages And Disadvantages Of Investing In Annuities
War On Wealth Series – Asset Growth
Business Loans and Business Credit With No Personal Guarantee – CLICK HERE!
Annuity Pros(Advantages)
One of the largest benefits touted is that annuities offer you tax-deferred income, as annuity income is taxed only when you elect to receive it. So you can avoid taxes on annuities if you never want to use it, however that usually is not the objective. It is taxed evenly no matter when you put the money in if it is annuitized (“flip the switch” and start taking income from the annuity). If you take it out some other way i.e. IRS rule 72t, withdrawals etc. then…
It is taxed LIFO (last in first out). The purported advantage to this is your tax rate is usually lower after you retire, however in my experience your tax rate is lower if you did not do a good enough job of planning for retirement. Somehow the whole concept of planning to have less money bothers me.
Because annuities offer you a guaranteed payment for life, it is insurance just in case you outlive your savings.
Although the timing of the payments might vary, depending upon the type of annuity you’ve selected, the payment amount is guaranteed. This locked in payment amount makes planning for retirement a much easier endeaver.
Annuity Cons (Disadvantages)
Only a portion of what the annuity cost you goes toward investments.
You will not get the full potential of your annuity payout if you die early.
The fixed monthly payout that most annuities offer is not adjusted for inflation.
Sales fees are high when you purchase an annuity and a portion of the purchase price goes toward a life insurance policy on you.
Watch Our Video “Why Equity Indexed Annuities re The Perfect Wealth Accumluation Vehicle”
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Other Posts In This Series are:
War On Wealth – A Primer (Introduction)
The Accidental Philanthropist; but Uncle Sam! How Many Times Can You Tax The Same @#$% dollar?
How Not To Turn $20 Into A $75,000 Disaster
Maximizing The “Bank Of You Concept”; Setting Up Your Own Private Bank
Life Insurance As An Estate Planning Tool
Private Retirement Plans Vs. Employer Sponsored Retirement Plan Options
Special Valuations For Intra-Family Transfers, Gift Taxes And Lifetime Transfers
Why You Should Start A Personal Business?
Advantages And Disadvantages Of Investing In Annuities
How Owning Real Estate Can Help Me Save Taxes
How To Reduce Your Real Estate Taxes
Annuities, How They Work And Their Tax Advantages
The Three Proactive Strategies Of Asset Protection
Trusts – A Basic Foundation
Leon C. Williams
Financial Strategist
LUCA Financial Services
leon@lucafinancial.com
blog: http://leonsblog.leonwilliams.me
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Tagged with: annuities • annuitize • annuity • annuity advantages • annuity disadvantages • deferred annuity • equity indexed • financial planner • fixed annuity • immediate-income annuity • Insurance • irs rule 72t • lifo • tax advantaged • tax-deferred • total asset optimization • variable tax-deferred annuity
Filed under: estate planning • Financial Services • Insurance
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