As you might already know, an annuity is a financial contract between you and an insurance company that guarantees you a fixed monthly income for the rest of your life. This means that even if this month's grocery bill is higher than last year's, or you have unexpected medical bills that eat into your budget, you'll still get the same amount of money every month—no matter what.

3 Powerful Benefits of Annuities for Retirees in Texas

/ Annuity Education, Bobby M. Collins, Uncategorized / By

What Is an Annuity? 

A financial contract between you and an insurance company that guarantees you a fixed monthly income for the rest of your life.

As you might already know, an annuity is a financial contract between you and an insurance company that guarantees you a fixed monthly income for the rest of your life. This means that even if this month’s grocery bill is higher than last year’s, or you have unexpected medical bills that eat into your budget, you’ll still get the same amount of money every month—no matter what.

The insurance company acts as the middleman between you and your retirement savings account; when it comes time for them to pay out their end of the bargain (the fixed monthly income), they go straight from your account into theirs without ever touching any other accounts (like savings). This way there aren’t any extra steps involved on behalf of either party before payments are delivered!

Why Buy an Annuity?

  • Taxes are deferred until you withdraw money, which means you can earn more by allowing the interest to compound.
  • Guaranteed income for life.
  • Guaranteed growth that does not depend on market fluctuations.
  • Compounding interest allows your money to grow faster over time because it can keep earning interest on itself as well as initial principal and any additional deposits made by you or a beneficiary.

3 Powerful Benefits:

An annuity provides you with 3 powerful benefits that other types of retirement plans can’t offer:

  • Guaranteed monthly income for life. You’re guaranteed to receive a fixed amount every month, no matter what happens in the stock market. This is especially beneficial if you need regular cash flow to cover living expenses or medical costs—and it can be a good way to supplement your other savings and investments.
  • Tax-deferred growth. Your income accumulates without being taxed each year, so the money grows faster than it would if it were subject to taxes every single year (which is how 401(k)s work). Your money also grows tax-deferred when it’s withdrawn during retirement, although there may be some restrictions depending on whether or not your annuity is considered an IRA or Roth IRA account type.
  • The power of compounding interest over time—which means that even small amounts of money make big differences!

Guaranteed Retirement Income for Life

A pension plan offers you a guaranteed monthly income for life, which means you no longer have to worry about your savings running out. If you outlive your savings, it passes onto your heirs if you name them as your beneficiary.

Annuities are issued by insurance companies and are different from other retirement plans. While they can be used to replace a pension plan, there is more involved when choosing an annuity than just getting the highest rate of return. If you have heard about immediate or fixed annuities, this article will help explain how these two types of annuities differ and how they might fit into your retirement plans.

Fixed Annuities

A fixed annuity offers guaranteed income payments for life as long as you live – no matter what happens with interest rates, inflation or exchange rates. You don’t have to worry about any sort of “market” volatility – your guaranteed interest rates are locked in for the life of the contract (10 years). This means that if both parties choose a 10-year term for their contracts and inflation increases during that time period, then their payments may not keep pace with inflation because their interest rate does not adjust upward each year like other investments would do (i.e., bonds). However, there is one advantage here: A fixed annuity guarantees that no matter what happens during those ten years where you might receive less than expected back on your investment due to market forces outside your control – but still get paid back everything promised without fail at the end date!

Tax-Deferred Growth

You pay taxes on the money after it’s withdrawn. This allows your money to grow faster than taxable investments such as CDs, stocks or bonds. Moreover, when you withdraw money from a CD or bonds in retirement, it can bump up the tax bracket on your social security or other forms of retirement income. With an annuity, this doesn’t happen because the growth is tax-deferred.

When you withdraw money from a CD or bonds in retirement, it can bump up the tax bracket on your social security or other forms of retirement income. With an annuity, this doesn’t happen because the growth is tax-deferred.

Every time interest is added to your account balance, it becomes part of the principal amount and starts earning interest itself. Over time, this could dramatically increase what you will receive in annual payments when you retire.

The power of compounding is simple: Every time interest is added to your account balance, it becomes part of the principal amount and starts earning interest itself. Over time, this could dramatically increase what you will receive in annual payments when you retire.

Advantages for Retirees

  • No market risk. Unlike a mutual fund, you don’t have to worry about the ups and downs of the stock market.
  • No investment risk. You don’t have to choose individual stocks or bonds or try to time the market.
  • Guaranteed income for life and protection against outliving your money. This is an important feature for retirees who want to protect their assets from outliving their ability to generate retirement income from them.