Over the past couple of decades, annuities have become much more popular as a way to generating tax-deferred growth, as well as an income stream that cannot be outlived – regardless of how long it may be needed. But are you too young to consider an annuity right now?
The answer may surprise you!
While retirees and pre-retirees often consider annuities as a component of their portfolios, these financial vehicles could also make a lot of sense for younger investors, too, and here’s why:
1) First, the money inside of an annuity is allowed to grow on a tax-deferred basis. This means that no tax is due on the gain in the account until the time of withdrawal. If a younger investor doesn’t plan to touch that money until a few decades in the future, these funds can compound exponentially over that time. This, in turn, can increase the pool of money that is available to convert to an income stream down the road.
2) Second, while younger investors may have access to an employer-sponsored retirement plan – such as a 401k – as well as a personal IRA account, what happens when the annual contributions to these plans have been “maxed out?” Contributing more than the annual maximum to qualified accounts can lead to penalties. But purchasing an
annuity can allow for an additional avenue of tax-advantaged growth – with no maximum contribution to worry about each year.
3) Next, younger investors can get a head start on creating a future income stream with an annuity. Because defined benefit contribution plans have all but disappeared, it is up to individuals now to supplement ongoing income that they may receive from other sources, such as Social Security. Plus, getting a jump start on an income-generating plan with an annuity may just be the ticket that allows a young investor to retire early.
Is an Annuity Right for You?
Regardless of your age right now, an annuity could provide you with a long list of benefits. So, how can you narrow down the best option for your specific objectives?
You should ideally start with taking to an annuity specialist. At Annuity Gator, we live and breathe annuities. We continuously monitor the market and review annuities so that consumers know what they can anticipate with particular annuity products.
If you’re in the market for an annuity – or even if you just have some questions about annuities – we are here to help. Feel free to reach out to us via our online contact form to set up a time to chat. Or, if you’re ready to talk now, just call (888) 440-2468 to speak with an expert today.