What are deferred and immediate annuities?
• Deferred Annuity This type of annuity is good for long-term retirement planning for the following reasons: • Payments on income taxes are deferred until you withdraw the money. • Unlike a 401(k) or an IRA, there are no limits on your annual annuity contributions. • There is a death benefit. If you die before collecting on the annuity, your heirs get the amount you contributed, plus investment earnings, minus whatever cash withdrawals you made. Immediate Annuity This allows you to convert a lump sum of money into an annuity so that you can immediately receive income. Payments generally start about a month after you purchase the annuity. This type of annuity offers financial security in the form of income payments for the rest of your life. In other words, you cannot outlive it. Immediate annuities allow you to: • Supplement your current income. If you are nearing retirement, you may consider transferring another savings or investment account into an immediate annuity. You can also mov
