An annuity is an investment made by an individual who is looking for the investment to see long-term growth that will be needed at retirement. Annuities provide a number of advantages over other investment plans, as it provides tax-deferred benefits, long-term growth, guaranteed interest rates, probate protection, trust advantages and a lifetime income. All this and an annuity guarantees the security of your principal and earnings from your savings. An annuity offers tax-deferred accumulation that allows your retirement savings to grow at a faster rate because you are not paying taxes. When you do pay taxes, they are calculated on the amount that you take, thus giving you control to reduce your taxes at retirement. Annuities do have some restrictions including surrender charges or fees for accessing the investment too early, as well as possible tax liabilities for taking the money too soon.

Annuities usually originate from insurance companies. Legislation governing these companies is very strict because federal law requires the insurance company to hold reserves that are the withdrawal value of your policy. State laws also require surplus capital to be available to increase your protection.

Fixed, immediate and equity indexed are the most popular annuities used to create retirement income, maximize tax deterred accumulation benefits and to protect assets.

An annuity is an ideal planning tool for many because it can help remove the stress of managing assets over a long period of time, and it will provide guarantees that you will have your money when you need it the most.