Retirement Insurance Company

1. Retirement Insurance Company

2. Annuities as an Investment For Retirement

3. As a retirement-planning tool, an annuity is a contract between you and an insurance company for guaranteed interest and income payments. During the accumulation phase, the investor makes payments to the issuing company, which will eventually be given back to the investor with added interest during the distribution phase, or annuity period. The accumulation phase can last from as long as one day to several decades, depending on the size and frequency of payments. While most investors make payments over long periods of time, an investor could choose to make a single lump sum payment; both methods will result in future payments that include interest.

4. The insurance company will then take the contributions, whether it was a lump sum payment or many dispersed payments, and invest it accordingly. The distribution phase begins when contributions stop and you start receiving annuity payments, this is when the annuity is said to be annuitizing. Distributions can be made to you as a lump sum or through regular distributions over time. Once contributions are being distributed, you cannot withdraw any of the funds, and you receive funds according to the distribution schedule agreed upon. Annuities also provide tax benefits to investors by deferring the taxes paid on the earned interest.

5. Annuities are not for everyone. They are generally overpriced, they limit the owner's investment choices, and they lack liquidity. We recommend annuities only for people that fit the following guidelines: If you plan to keep the annuity for at least 15 years, whether you make one lump sum payment or periodic payments over this time. • If you are currently in a high tax bracket and expect to be in a lower income tax bracket in retirement • If you do not need distributions until age 59 1/2 • If you do not have heirs (because they will have to pay ordinary income taxes on any appreciation) • If you want a guaranteed income for life in retirement

6. Purchasing Annuities can be purchased through the immediate payment, single payment deferred, or periodic payment deferred methods.Under the immediate payment method, you give the Retirement insurance company one lump sum payment. This is an option often used by people who are close to retirement and want to get payments immediately, usually, 30 days after the payment is made.Inthe single payment deferred method, you make a lump sump payment but payouts do not start until sometime in the future. This option is usually used when you have enough money to put away, have several years until retirement, and you want your money to accumulate earnings for that deferral time.

7. Fixed Annuities A fixed annuity provides you with pre-determined monthly distributions starting on a specific date. The insurance company invests the money and agrees to make the payments in the future. Investors choose fixed annuities to provide them with a steady source of future income. But your "guaranteed return" will be affected by inflation. Distributions can be increased by 3% to 5% each year (fee involved) and can last for a fixed period or for life.

8. Some more points on Annuities as an Investment • Equity-indexed annuity • Taxes and Distributions/Payments • Fees • GICs Source: http://www.investorguide.com/article/11702/annuities-as-an-investment-for-retirement-igu/

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