Is Annuity The Best Piggy Bank?

Is Annuity The Best Piggy Bank?

Preparing for your retirement can be very stressful and tricky, especially if you have no idea where to start. Annuities, 401Ks, IRAs, it probably all sounds like a foreign language if you have yet to talk to a financial advisor. It is not as complicated as it sounds. Educating yourself on what you can do to better your future is the best thing you can do. Retirement may be a long way away for you or it might be beating at your door, either way there are many options for you so you won’t get left in the cold. The first step is understanding what all of those complicated words mean!

Before you can decide on a retirement plan that is best for you, you must know what options you have available to you. A 401K is one of the most common retirement plans available. These are plans that you typically receive through your employer where you are able to contribute specific amounts via your paycheck. Typically employers will match what you put in or offer some kind of contribution as a reward for your employment with their company. Any withdrawals from these accounts before the age of 60 will cause you to be penalized. These are always great to have but you should keep your options open as it may not be enough for retirement.

An IRA is another way that you can invest your money for retirement. These are pre-tax dollars that you can invest on an annual basis in any account that you choose. You should talk to a financial advisor before investing in any type of IRA. This should be something that you acquire along with a 401K retirement plan. Another kind of IRA is a Roth IRA. These are funds that are invested after tax dollars and are typically for individuals with an income less than $99,000 annually.

An annuity may be an option for you depending on your financial situation. An annuity is an investment that you obtain via insurance companies to protect you from outliving your income and retirement funds. This gives you the ability to invest over a period of time or one lump sum. This is a great option for individuals who want that additional cushion to fall back on just in case 401Ks and IRAs are not enough. It is always good to have a number of different options for your retirement. There is no such thing as too much preparation.

Those are the most popular options for retirement. It will depend on what your financial situation is and what your goals are for the future. As I said previously, there is no such thing as too much preparation, only you know what is best. Consult a financial advisor before making any long-term decisions.

Is Annuity The Best Piggy Bank Credit Picture License: Karen V Bryan via photopin cc

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