On Fixed Annuity Rates: Finding the best option for you

When you’re looking to diversify your retirement investment options (always a good idea but especially good in the current economic climate), you really want to branch out and put your hard-earned money into several different options. A fixed annuity is a solid choice in this regard. Never heard of a fixed annuity? Well, think of a CD (certificate of deposit) offered by your bank only the fixed annuity is more focused on saving for retirement as depositors have a choice of how their investment is distributed: immediate (monthly payments are issued right away until the initial outlay plus interest is gone) or deferred (more like a CD in that the payment is issued at the end of the term with the fixed annuity rates of interest compounding like any other investment). A couple of examples of fixed annuities include government securities and corporate bonds.
One of the best things about investing in a fixed annuity is that there’s a single up-front payment and that’s all. Of course you can make multiple investments if you like, but that would require buying additional annuities which, unlike a 401(k) or IRA, is allowable by law. As for the fixed annuity rates, 4 to 10% for a 2 to 5 year contract is pretty standard although the provider and the set term will determine the actual rate. Longer terms between 5 and 10 years can even offer rates of 8-10% or higher so these ones can really rake in the cash. But even if you purchase a 2 to 5 year annuity, it would still have a greater earning potential than a CD; especially when you consider that a 10 year annuity has an amazing return potential once the deferred-tax option goes into effect. Keep in mind though, if you’re younger than 60 and are planning to either look at purchasing a CD or annuity, you actually may want to consider a CD if only to avoid the 10% IRS tax penalty. If you’re over 60 though, then by all means get an annuity.
The benefits to fixed annuities don’t stop there however; even after you pass away, your annuity can be tremendously beneficial to your loved ones. You can add a life insurance provision to your annuity which can provide death benefits much like a life insurance policy, but this way you would not have to spend extra money on a separate policy. In addition, annuity payouts are not subject to estate or death taxes so you can rest easy knowing that your loved ones will be receiving payments without having to go through the hassle and hardships of probate.
With all of these benefits, it’s no wonder why modern retirement planners highly recommend fixed annuities as a source of lifetime income. With the fixed annuity rates poised to beat future inflation costs, you can invest with confidence; secure in the knowledge that you will receive more of your money for the rest of your life.