Planning for financial stability becomes a top priority for those nearing the later stages of their career or approaching retirement. Annuities, especially a multi-year guaranteed annuity (MYGA), can add a level of predictability to your financial future.
Learn how annuities function in retirement planning, offering stability amidst the financial uncertainty of the future.
Understanding the role of Annuities in Retirement Planning
Annuities are financial products that can provide a steady money source for a certain period or even for life. They serve as a financial safety net that catches you when you retire.
Among the different types, a MYGA offers a fixed growth rate for your money for a set period.
This means you know exactly how much money you will have at the end of the term, making it easier to plan your finances.
Exploring the Benefits of MYGAs in Financial Planning
MYGAs offer specific benefits that make them appealing for long-term financial security. One of their most notable features is that they provide a steady growth rate, which means you can count on a certain amount of money growing over time.
This is particularly comforting in times when the market is unpredictable. As an added benefit, the growth of the money in a MYGA is tax-deferred.
This means you don’t pay taxes on the growth until you start withdrawing it, potentially leaving you with more money to grow over time.
Likely, the most appreciated feature is how straightforward MYGAs are. You agree to a term, and your money grows at the agreed rate. There are no surprises and no strings attached.
Comparing MYGAs With Other Annuity Options
When looking at other annuities, MYGAs stand out amongst the others because of their stability and faster accumulation.
Other annuities might offer the potential for higher growth, but they also carry more risk and complexity.
For example, variable annuities depend on the performance of investment options you choose, which means their value can go up or down.
Meanwhile, fixed-indexed annuities offer returns based on a stock market index’s performance, with some protection against loss; however, they can still be more unpredictable than MYGAs.
Integrating Annuities With Other Retirement Investments
When you put together a retirement plan, it’s smart to use different kinds of investments. This way, you can have both safety and the chance to make more money.
MYGAs are a good choice for the safe part of your plan. They give you a steady growth that you can rely on allowing you to consider stocks or mutual funds for the chance to grow your money more.
Case Study: Linda Boosts Her Retirement Plan With a MYGA
Linda, 55, a school teacher, is getting ready for retirement. She saved money and will get a pension, but when planning, she wanted something extra that was safe and would grow for sure.
She chose to put $40,000 into a MYGA because it promised a steady 4% growth every year for 10 years. Here’s why it was a smart move:
- Steady Growth: Linda liked that a MYGA would grow her money at a steady rate, not dependent on stock market performance. This made her feel safe about her future money.
- Smart Saving: A MYGA grows without paying taxes immediately, which means Linda has money she can grow more over the years.
- A Good Mix: Linda has other investments that might go up and down, but a MYGA is always steady. This balance makes her retirement plan stronger.
In 10 years, Linda’s MYGA will turn her $40,000 into about $59,209. This means she’ll have more than $19,000 extra for her retirement.
Adding a MYGA to her retirement plan gives Linda a mix of investments that work well together, making sure she has a stable and growing income for her future.
Addressing Common Misconceptions and Questions About Annuities
Some people think annuities are too complex or not worth the effort. However, adding a MYGA to your portfolio is straightforward.
You just choose how long you want to keep your money in it, and it grows at a set rate. However, others worry they might lose access to their money.
It’s true that a MYGA works best if you let your money grow until the end of the term, but having this money grow safely can be helpful for your retirement.
Also, people often wonder if the fixed growth rate is enough. While it might not be as high as some investments, the rate is stable, making it a reliable part of your retirement plan.
Plan Your Secure Retirement With Pillar Life Insurance
Adding annuities, especially a MYGA, to your retirement plan is a wise move. They bring stability and predictability to your financial future.
With Pillar Life Insurance, you can find a MYGA that fits your needs, helping you to build a retirement plan that makes you feel safe and secure.
If you’re looking for a way to ensure a steady financial return in your retirement years, Pillar Life Insurance can help with our online portal. Together, let’s explore your options and choose the best path for your financial future.