Wednesday, April 10, 2013

Planning For Retirement On The Installment Plan

Retirement (Photo credit: Tax Credits)
When people are planning for their retirement future the first idea for saving is through a 401K plan. Many times these plans are not available to all people. This brings up the question of how do I start to save for retirement. 

Because planning for retirement takes a lot of financial planning and management of money and resources it might be a good idea to hire someone who can help guide you. For those who do not will often fail and will not have any money to live on once retirement has approached. It is important to plan for retirement while you are still working and have an income that is guaranteed. Of course the earlier you start planning the better.

When looking into retirement plans for the future many people often inquire about a payment plan or an installment plan where money can be placed and saved for future use. This is where an annuity can come into play.

Fixed Annuity

There are two different types of annuities that can be used. The first of these and the most common is the fixed annuity. When investing in a fixed annuity there is a one-time payment that is involved. This investment for a specified time period and will involve a fixed interest rate through out the time period. For this reason financial planners will often recommend this type of investment plan. It is a source of income that is not interrupted when you go to retire.

Another large advantage of a fixed annuity when compared to other investments is when it comes to be tax time. Tax deductions are not applicable on the money that is used to invest in the annuity. The reason why this makes a fixed annuity so attractive is because when the person who has invested has reached the maturity come retirement age they are out of the income bracket to be taxable. Therefore any returns that are obtained by the annuity are tax-exempt.

Deferred Annuity

A deferred annuity can also be used as an installment plan for retirement. This is a plan that comes with a periodic investment. There is not a fixed amount needed when it comes to this type of investment. However there is a certain fixed amount that is needs to be made for a certain amount of time. The person who is investing is who decides how much should be invested. The investor will start to receive the returns of their investment once the annuity reaches the maturity date. As with the fixed annuity the investment is not taxable but the return will be taxable at the end of the year.

When a person wants to invest in their retirement so that they are able to enjoy a worry free life one of the most popular ways to do this is through installments. By working with a financial planner and figuring out what is best for you it is possible to achieve and enjoy retirement without having to worry about how to live comfortably.

Author Bio
This guest post is a contribution by Janice. She has been linked up with some good financial communities. She used to share her thoughts there. She is specially experience on topics like debt, credit card, bad credit personal loan, insurance, mortgage etc.

1 comment:

  1. Great information share with us. “planning for retirement” is compulsory for future. Yes, you are right “many times 401k plan is not available to all people”. According to me, I am going with fixed annuity.


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