With your retirement drawing close, you must have already involved in financial planning to ensure a secure future after retirement. Well, those who keep genuine interest in financial schemes must have heard about Retirement Annuity. To clear the air for all, this particular type of annuity offers all the necessary financial support required after retirement. This annuity scheme offers a steady source of income to enjoy a hassle free life after retirement.
Let us have a detailed look at the scheme of Retirement Annuity and the advantages and disadvantages attached to it -
What is a Retirement Annuity?
A Retirement Annuity refers to an agreement signed between you and the insurance company. This agreement requires you to offer payments into an account that is controlled by the insurance company. After, your retirement, the insurance company calculates all the earnings of the investments and pays you a certain amount in periodic terms. You can choose to set the period in a quarterly, monthly, or yearly basis.
This particular scheme, being an investment option has its own advantages and disadvantages -
Here is a look at some of the advantages of the annuity plan after retirement -
1. Benefits are guaranteed
2. Tax deferred income growth within account
3. No limits as in to 401k or Individual Retirement Account (IRA)
What is a Retirement Annuity?
A Retirement Annuity refers to an agreement signed between you and the insurance company. This agreement requires you to offer payments into an account that is controlled by the insurance company. After, your retirement, the insurance company calculates all the earnings of the investments and pays you a certain amount in periodic terms. You can choose to set the period in a quarterly, monthly, or yearly basis.
This particular scheme, being an investment option has its own advantages and disadvantages -
Here is a look at some of the advantages of the annuity plan after retirement -
1. Benefits are guaranteed
2. Tax deferred income growth within account
3. No limits as in to 401k or Individual Retirement Account (IRA)
Like, any other financial scheme, Retirement Annuity too come with some disadvantages, here is a look at them -
1. Rates are high
2. Penalty of 10% on early withdrawn
3. Taxation Policies of Retirement Annuity
The fixed annuity or Retirement Annuity though is said to be a tax-deferred scheme, yet has a number of hidden clauses attached to it. Therefore, it is essential on your part to have a clear picture about its tax-deferral policy. The policy says that taxes on the income earned within the plan will only be deferred until withdrawn. After, the withdrawal, the income is taxed according to the income tax policy and not the capital gains tax.
This plan allows you to relive the golden years of your life characterizing the days with involvement in little pleasures in life like, dining out, or taking a vacation.
1. Rates are high
2. Penalty of 10% on early withdrawn
3. Taxation Policies of Retirement Annuity
The fixed annuity or Retirement Annuity though is said to be a tax-deferred scheme, yet has a number of hidden clauses attached to it. Therefore, it is essential on your part to have a clear picture about its tax-deferral policy. The policy says that taxes on the income earned within the plan will only be deferred until withdrawn. After, the withdrawal, the income is taxed according to the income tax policy and not the capital gains tax.
This plan allows you to relive the golden years of your life characterizing the days with involvement in little pleasures in life like, dining out, or taking a vacation.
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