You have age on your side at the moment and can work pretty hard for a well-paying job. But what about when you get old, things are not going to be super smooth. A regular source of income makes life much easier. These are the times where a life insurance annuity plan comes to the rescue. If you decide to invest in an annuity plan, it starts accumulating funds for your future. So that when you decide to hang your boots, this will act as your regular source of income. For any annuity based plans, you pay a lump sum amount or regular installments and in return receive regular payouts upon your retirement. The duration of the payouts can either be as long as you live or for a pre-defined duration. Thus, the following are some of the reasons why you should not defer your Annuity Plan and get started with it as soon as you possibly can.
The regular installments or lump sum investment in an annuity plan opens up an avenue for regular income. Generating money out of those funds comes under the purview of the insurance company. Thus, you should only worry about the investments and not the source of income post your retirement. The insurance company should worry about generating enough funds to support you through your post-retirement phase and not you. Based on your needs you should choose a payment frequency such as monthly, quarterly, half yearly or yearly and start saving from early days in your career.
No Upper Ceiling
Most of the insurance plans have some kind of upper ceiling. That not only prevents you from investing more money but more importantly stripes you from the opportunity to grow a bigger corpus for your retirement. There are no such concerns when it comes to annuity plans. Almost all the annuity plans do not have any upper limits or caps when it comes to a ceiling. This ensures you can make the most of them and invest higher amount for a more financially secure future.
Therefore you should not delay in starting to invest as if you start early you can save more for your future.
During the later years, it becomes a bit difficult to manage an investment portfolio and to have an appetite for taking risks. Thus, it makes more sense to invest in traditional tools to have a little bit lower but sure shot returns. However, the interest rates are constantly on the decline and would only get lower in future. In such cases, even if you have some money left with you, the investments or re-investments might not fetch you that much money. Also, that is something you would not want to bother yourself post your retirement. Annuity plans, on the other hand, promises a constant return rate and you don’t have to worry about the investments or about returns with lower risk, the plan takes care of it all.
Therefore do not delay in saving for a plan which gives you constant returns when you need it most.
Investing in annuities provide you with tax benefits in a couple of instances. For starters, you can use all the investments in annuities for tax exemption. Secondly, post-retirement, if you want to withdraw the corpus, you can withdraw up to a certain percentage of total value without having to pay any taxes. You might have to pay some taxes if the plan generates income that comes under the tax slabs.
Therefore a delay in starting your annuity plan may eat out your savings in form of taxes.
Income for Life
The life expectancy is constantly on the rise. With access to better hospital facilities and technological advancements, it would end up going even higher. An annuity plan would come in really handy in such situations, as they assure a constant source of income for your entire lifetime. The kind of plan and disbursement style you pick also has a major role to play. But the thought of not having to worry about financial constraints post your retirement can be very peaceful to many.
The current generation does not have too many retirements based solution provided by their employers as the previous generations had. Investing in an annuity plan can be a difference between a struggling post-retirement life or a peaceful life spent with the people you love and always wanted to spend some more time with. When you do decide to pick up an annuity plan, there are different types and categories to choose from. But make sure you add one to your portfolio at an early stage in your career. You should start early in buying the annuity plan as you can accumulate a large corpus on your retirement and can also save a substantial amount in form of taxes while investing in the plan.