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Learn a bit more about fixed and variable immediate annuities

Learn A Bit More About Fixed And Variable Immediate Annuities

It doesn’t matter if you have a good job, or a very good job, you have to think about the life after retirement. Many people are completely aware of the fact that they should save some money to for a better future. But, many of them never become able to do it on their own. This is the reason why it becomes important to choose a specific financial product. That’s exactly the time when you can think of using the option of immediate fixed annuities.

Today, many people are aware of annuities, but there are few who still don’t know the basic differences between a fixed and a variable annuity. In case you are also one of those people, here is what you should know about the both types of annuities.

In a fixed immediate annuity, the underlying investments will always be fixed. It means there will be no change in the rate of return. A fixed rate of interest will be associated with fixed annuities. This is more like a bond type of investment. This is the biggest difference between the both types of annuities.

On the other hand, you will always find a variable rate of interest with variable annuities. It means your return may change over time. It is due to this particular feature of variable interest that you can take it as a stock type of investment. In this type of investment you might see some fluctuations in your returns and that’s exactly like you see when doing business in stock market.

Due to this basic difference, you can find these annuities offering different types of benefits. For instance, when you opt for variable annuities, you can put money away today to enjoy certain tax related benefits. This is not a possibility with fixed annuities. But, it is also crucial to mention that variable annuities will always be more expensive than fixed annuities and this is due to morality and expense charges.

Now, after going through this information, it is obvious to get confused when making a choice about any one of the annuities. But, if you are confused, you should take some time to determine your exact needs and requirements. This is the best way of making an informed decision. Also, you should take your expected life span into consideration to get to a conclusion. For instance, if you are worried about outliving your assets, you can choose the option of a fixed immediate annuity.

It is so because this type of annuity starts paying right away and provides you with enough money to deal with your daily expenses. In case of variable annuity, the insurance company lets you enjoy your money in future, and don’t offer the luxury of using your money right away. So, if you think you can not wait to get a regular stream of income, you should go with fixed annuities. But, think twice before making any decision.

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