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Annuities are an investment tool that investors use to help plan for retirement. Before deciding whether to make an annuity contract part of your financial plan, it is important to understand how annuities work and what potential pitfalls you need to watch out for.<\/p>\n
Annuity contracts are usually made between an investor and a life insurance company. The individual pays a single premium or series of payments at the outset in exchange for a guaranteed distribution or a payout stream determined by the performance of the annuity and underlying investments. An investor can opt to receive payments for a period of time or for the rest of their life. Annuities usually provide tax-deferred earnings growth, and when withdrawals are made, the gains are taxed as ordinary income, not capital gains. Annuities may include a specified minimum death benefit to one’s beneficiary. Early withdrawals may bring tax penalties and surrender charges from the (more…)<\/span><\/a><\/p>\n","protected":false},"excerpt":{"rendered":" Annuities are an investment tool that investors use to help plan for retirement. Before deciding whether to make an annuity contract part of your financial plan, it is important to understand how annuities work and what potential pitfalls you need…<\/span><\/p>\n