When it comes to saving for your retirement, many salaried individuals today think of annuities. Annuities have become more popular as a savings tool than a retirement savings plan. They are almost similar to your savings accumulating in the bank accounts or a Certificate of Deposit, but only life insurance companies’ issue them. To boost their savings, an investor can choose from a variety of investment options, such as stock, bonds, and mutual funds. Still, annuities have gained a lot of ground because of the insurance and security offered by them, apart from the assurance of an income and high growth in savings. Let’s look at the pros and cons of owning an annuity – the awareness helps decide on the purchase of annuities and retirement planning.

Tax advantages: This is one reason why individuals prefer buying annuities to several other forms of savings tool. The tax-deferred feature offered by annuities allows the individuals to pay the tax on the income from annuity gains at a later date, when perhaps the annuitant starts withdrawing. This means that you gain interest rates on the money that you would have otherwise paid in taxes.

Greater choice: You can select an annuity from the various types that are available, comparing the benefits they offer and matching them with your own financial situation. If you want a secured form of investment, you may invest in a fixed annuity or a variable annuity if you want probable higher gains in less time and don’t mind the risks. A deferred annuity maximizes your savings. If you are retiring soon and want to ensure immediate payments, an immediate annuity is more suitable.

Flexibility: If you are alert enough and take the initiative of studying every feature offered by the annuities, you can actually choose from a wide range of flexible options. Annuities let you choose among a variety of features such as varied surrender charges, withdrawal benefits, different payout schedules, retirement and death allowances, and other features and benefits that you can customize as per your requirements. You can even select the level of risk you want to take or the investment options that will suit you, if you select equity indexed annuity.

Added security: Fixed annuities are the safest form of annuity. With an equity-indexed annuity, you can enjoy the volatility of stock markets and the promise of higher returns that come with it, along with the promise of guaranteed returns. Further, the security and safety of the money invested in annuities are ensured by the state rules, which regularly monitor and scrutinize the insurance companies that sell annuities.

The annuity specialists at AnnuityLibrary.com , however, suggest that investors should consider the financial strength and reliability of the insurance company before signing the annuity. Also, new investors should be more alert while investing in variable annuities. Variable annuities often go wrong because:

• Considering the financial situation, risk tolerance, and financial goals of the annuitant, it may not be the right investment
• The funds allocated in the sub-accounts may not have been done optimally and effectively
• For individual financial gains, the broker may not have revealed certain important clauses regarding the variable annuity
• The annuitant may have ignored or overlooked certain clauses and avoided any comparative study of the contract

For more help on annuities and retirement savings plans, you can consult the financial planners at AnnuityLibrary.com. For help, advice, and more information, Click here or call 1-800-998-4056 toll-free.