Annuities are an important aspect in planning your financial stability and offer protection against economic downturns and irregular earning periods. If you’re close to retirement, annuities are attractive because they offer a steady source of income as a supplement to their regular earnings. Annuities can be paid out over a predetermined amount of time or over the period of one’s life.
Annuities are insurance products that can help ensure financial stability in your retirement years. You pay into your annuity and in return receive supplemental income during retirement. With a fixed annuity, your insurer is locked into an agreement to pay the interest rate you agree on for a specific period of time.
Purchasing a fixed annuity is a safe way to ensure that you will have your desired interest rate for the entire term of the annuity. The interest you earn in a fixed annuity is not taxed until you withdraw your money after retirement. However, if you choose to withdraw your money early, not only will your interest be taxed, but you will be charged a percentage penalty.
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