The Ultimate Guide to Retirement

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What’s an annuity?

The first thing to do is to learn the concept of an annuity. An annuity is a contractual insurance product that, as we said, are sold by financial institutions. The annuities are designed to provide a steady income for a period, therefore they are such an important...

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What are the different types of annuities?

The first thing to do is to learn the concept of an annuity. An annuity is a contractual insurance product that, as we said, are sold by financial institutions. The annuities are designed to provide a steady income for a period, therefore they are such an important...

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Fixed Annuities

What is a fixed annuity?

Usually this type of annuities works as certificates of deposit (CD) issued by insurance companies. Like CDs, fixed annuities pay guaranteed rates of interest, usually higher than average bank CDs. Fixed annuities will be deferred when they accumulate rates of...

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What are its advantages?

The biggest advantaged of fixed annuities is that they pay guaranteed rates of interest that will be tax free until you withdraw it and offer low investment minimums -$1,000 to $10,000. These qualities make fixed annuities an appealing option to investors that want an...

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What are its disadvantages?

Despite its benefits, there are a few disadvantages to consider. The fixed annuities rates can be fixed for a determined period and then drop when this period ends. If you don’t like the new rates and decide to take your money out you probably will have to pay...

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Variable Annuities

What is a variable annuity?

The first thing to do is to learn the concept of an annuity. An annuity is a contractual insurance product that, as we said, are sold by financial institutions. The annuities are designed to provide a steady income for a period, therefore they are such an important...

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What are its advantages?

Variable annuities are designed to give you a chance for long-term capital growth based in smart investments. By owning a variable annuity, you’ll be able to invest in anything you like, from half a dozen to twenty, or sub accounts that works like bond mutual funds....

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What are its disadvantages?

Before buying a variable annuity, there are some drawbacks that you need to consider. For instance: The payouts will depend in the investments you choose, meaning: a higher investment risk. If the investments you make go down, your annuity will also go down, affecting...

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Equity-Indexed Annuities

What is an equity-indexed annuity?

Being a combination of both types of annuities, equity-indexed annuities are designed to offer you the advantages of fixed and variable annuities at the same time. Buying an equity-indexed annuity you will get a low-risk of investment and a guaranteed minimum return...

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What are its advantages?

Equity-indexed annuities have the quality of paying a higher return than a fixed annuity without the risks of a variable annuity. By owning an equity indexed annuity you will have the chance of participating in the market to increase your gains but you will have a...

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What are its disadvantages?

Before owning an equity-indexed annuity you need to acknowledge that these are very complicated systems that will come in several forms, this complexity makes them difficult to understand and without fully understanding them will be harder to take advantage of their...

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Immediate Annuities

What is an immediate annuity?

As you probably deduce from its name, immediate annuities start paying out immediately. These are often bought by people that are already retired. In immediate annuities, you give an insurer company a large sum of money and you will receive regular income payments...

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How do I know if buying one is right for me?

If you’re concerned about outliving your money, an annuity could be a great addition to your retirement strategies. If you feel you have a high life expectancy and you want to secure an income source, you probably should consider the purchase of an immediate annuity,...

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What are its advantages?

Since immediate annuities start paying out instantly, represent a great alternative for retirees to prevent outliving their retirement money. The biggest advantage of immediate annuities is that if they’re fixed annuities would be easier to incorporate into our...

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Longevity Annuities

What is a longevity annuity?

These are also known as advanced life delayed annuities and they offer protection against outliving your retirement money. If you buy a longevity annuity you will have to wait to reach around 80 years of life to start receiving payments. Once these payments begin, you...

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How do I know if buying one is right for me?

There are three main question you must answer to yourself before buying a longevity annuity: does your family has a history of longevity? If so, do you have a -relatively- good health? And do you think there’s a chance you outlive your retirement assets? If the answer...

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What are its advantages?

The main advantage of owning a longevity annuity is that you will be safe against something you can’t control: running out of money in your retirement years. For average retirees, to take 10% to 15% of their retirement savings to buy a longevity annuity will be as...

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