Workers who are looking for ways to invest funds in a retirement account do have various plans which can help them save for their retirement needs as 401(k)s, IRAs, and even annuities offer opportunities to build some form of security for expenses and financial needs later in life. Yet, annuities has become one of the more popular options as there are various payout opportunities that investors may use after they have reached the age of retirement and need some form of stable income.
Annuities offer a regular payout option, under certain plans, which can guarantee an investor some form of income for a set period of time for the rest of their life. As an example, there are opportunities for those who invest in annuities to collect income for a guaranteed period of time, meaning that an investor will be able to select a specific payment for a specific number of years, which can range from a short-term to a much longer-term depending upon the needs and type of annuity plan one has.
However, there are also options for an investor to receive lifetime payments from their annuity through either a fixed or variable plan. Obviously, this amount which is received will vary depending upon and investors age, the amount they have contributed to their annuity account, and life expectancy is also a factor in some cases.
While annuities are typically used because they do offer multiple options, which can give an investor a more concrete, steady form of income, many financial advisers often suggest that investors diversify their retirement accounts and not simply rely on one form of retirement planning. As an example, someone who invests in annuities may also have a 401(k) plan or an IRA, which can be helpful later in life as certain types of investment vehicles will be taxed once withdrawals are made, while others may allow the investor to withdraw earnings tax-free.
Recently, Roth IRAs were in the news because of new rules on converting other retirement accounts to a Roth plan, but again, simply putting all of your eggs in one retirement basket may not always be in an investor’s best interest and, for those who are interested in annuities or either a Roth IRA account, many advisers suggest that investors may want to, again, diversify their retirement plans so that they can maximize their income after they have retired.
Obviously, there are a variety of retirement options which may be used by investors and even payout options within various retirement accounts, but depending upon and investor’s wants, age, and the amount they can contribute each year, certain types of accounts may be more beneficial than others and there are retirement investment vehicles which may be more costly, in terms of commission fees and taxes, so before choosing a retirement plan or plans, these factors need to be addressed by an investor so that they can choose the best option for their retirement goals.