Retirement: Annuities
Annuities are financial contracts
with an insurance company
that provide a regular income at retirement.
A deferred annuity allows
you to contribute money now
for use later. You are not allowed to touch
this money until
you reach the age of 59 and
a half. When you reach retirement age, the
money you have built
up in your annuity will provide
you regular income payments throughout your
retirement.
An immediate annuity skips
the step of making regular
payments into an annuity
fund. If you have a large sum
of money, you can invest this in an annuity
and
receive regular payments
throughout retirement.
There
are no limits on how much
you can contribute to an annuity.
Unlike
retirement accounts, the
money you contribute
is not tax-deductible, but the earnings on the
funds are tax-deferred until
you withdraw them. |
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