An annuity allows you to earn tax-free interest that grows without penalty, so that you can plan and save for your retirement. The different types of annuities allow you a mixed bag of options so you can achieve your financial goals in the way you're most comfortable.
Each different type of annuity has separate features and meets individual needs. Because it can get very confusing and overwhelming, here's a crash course:
Annuities come in two basic types: fixed or variable. A fixed annuity offers a fixed rate of return over a period of years, while a variable annuity's rate of return changes, depending on how well sub accounts perform. Both fixed and variable annuities have their own pro's and con's...
Fixed annuities will give you a steady return and allow you to easily see how much you'll need to save for retirement. Variable annuities offer you the chance to earn a high percentage of return while carrying more risk to your principal.
There are also a few risks when choosing one type of annuity over another. If you decide to go the safe route with fixed rate annuities, you stand the risk of missing your chance for larger returns. If you choose variable annuities, you risk losing principal and missing out on the safety of at least earning some interest on your investment.
For more information on fixed or variable annuities, contact us today! We're Podmaska Insurance, an independent insurance agency based in Providence, Rhode Island.
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