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The Basics of Retirement

Retirement is always closer than it seems. If you are thinking about retirement, then depending on your Social Security check as your primary source of income might not seem like a happy thought. The truth is that everyone needs to think beyond Social Security and the way to do that is through building a solid retirement portfolio.

Developing a solid plan depends on a number of factors including your present day income, your age, your current assets, and determining the quality of life you want to have. Aside from your 401ks, 403bs, pensions, life insurance policies, savings, and other financial instruments, a well rounded portfolio includes any number of annuities based on your anticipated financial need. Providing for the needs of a loved one in the event of a death, illness, or unexpected financial hardship should also figure into the equation as well.

In building retirement income, annuities have captured the attention of investors over the years as a safe and proven way to generate income streams – either immediately or at a later date that is determined by the investor. Annuities can provide the investor the option of placing money in a place where they guarantee receiving tax free growth every year or until the funds in the annuity account are withdrawn. A widely used investment by both young and old, annuities are contracts that promises to make periodic payments to the investor for an established amount of time and at a particular rate of interest. This level of predictability helps calm fears of market up or down swings.

Annuities make for worthwhile investments because they offer tax-deferred growth. In addition, when you finally do pay taxes, you may be in a lower tax bracket. Therefore, one the whole, annuities make it simple to create retirement income streams as they provide for accumulated assets to grow without getting taxed on that growth prior to making a withdrawal.

There are various types of annuities that can strengthen your retirement portfolio. Fixed, variable, and index annuities all provide unique features that can be appealing to the investor. Creating retirement income through various annuity accounts can create various streams of periodic paychecks that the investor knows will be there for a particular time period. In addition, unlike some other saving vehicles, some annuities allow for added security when the investor dies, as the remaining payments can be passed to a beneficiary.

A retirement portfolio with several annuities can all have various distribution or pay days that can supplement other investments the investor has made. With the predictable fluctuations in the market, fixed annuities generate the attention of frugal investors who would like to foresee a steady and dependable rate of return. Yet, the investor less averse to risk can also increase his growth by investing in variable or indexed annuities which are often tied to the performance of either a group of stocks or the overall market. Either way, annuities offer an investor some very good benefits and the ability to diversify his or her investment options that also provide deferred tax benefits. Generating several streams of income for retirement and to last for as long as you live can help you maintain a comfortable standard of living for you and your family.