Benefits of Using Annuities for Retirement

husband and wife watering flowers, using annuities for retirement savings

In this Article

Whether you are already planning for retirement or your working years have just begun, it’s never too early to start saving for the retirement of your dreams. Read on to learn more about the importance of saving for retirement early, and how annuities can help you reach your goals.  

Limitations of traditional retirement plans 

Unlike the traditional pension plans of the past, retirement savings plans have adapted to the market and provide more long-term security. Relying on Social Security as your grandparents might have done could mean that you won’t have enough money to pay for your ideal retirement when the time comes. Even more, investing in traditional retirement accounts, which are technically safe against loss of principal, have very limited growth potential.  

Instead of relying on these techniques, your Quility insurance advisor can help you start saving for retirement with an annuity. When you choose a retirement savings vehicle that is designed to protect your retirement income and assets, you won’t have to worry about market gain or loss.

How annuities work 

When you purchase an annuity, you make contributions to your account over many years, as you would with any investment plan. During the accumulation phase, the funds you pay into your annuity grow tax-deferred, so any taxes that you owe on the growth of the account won’t be due until you start taking money out of the account. Since most people invest in an annuity during their working years, they are generally in a lower tax bracket once they enter retirement than they were when they purchased the annuity. This means that once they pull money from the annuity, in many cases the account will not be taxed as heavily. 

When you are ready to take money out of your plan, you “annuitize” your contract. Then your annuity will provide a regular income stream – money that you can use however you wish.  

When to purchase an annuity  

We recommend purchasing an annuity before you reach retirement age. Some annuities come with surrender charges over a period of years, so you will want to make sure you know how long you have to pay into the annuity before you can withdraw money (this could affect when you can access your funds in retirement). 

Why you should use insurance products for retirement savings  

When you use an annuity for a portion of your retirement savings plan, you create a guaranteed income stream that will ideally last through your retirement years.

Knowing you will have a fixed amount of income available every month can provide peace of mind and financial confidence so you can enjoy a worry-free retirement.  

Purchase an annuity with the support of a licensed agent.

Unlike other investment options like a 401(k), annuities can give you peace of mind before and during retirement. You won’t have to worry about stock market performance, and you can enjoy the security of knowing your nest egg is protected.

If you are ready to learn more about how an annuity can help you achieve your dream retirement, connect with a licensed agent today. We’ll help you find the best retirement savings option for your budget and needs, securing your new annuity in just a few simple steps.

Let’s Get Started

If you are ready to get an annuity, chat with a licensed agent today.

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Calie Brummer is a staff writer and Head of Digital Communications at Quility Insurance with a focus on financial well-being and life insurance solutions.