When to Buy a Retirement Annuity

Purchasing a retirement annuity might turn out to be the best option for you especially if you want to build a diverse investment portfolio. What's great about an annuity is that it allows you to vary your portfolio while ensuring a guaranteed return of investment. In addition, there is also less risk involved if you compare it to other investment options. But before you rush out to buy one, you need to know about the different types of annuities available and how they work; start by contacting a company like Puritan Financial Group. Each person's needs are different and knowing which among the different types of annuities can help you choose which one will work for you.

Buying a Retirement Annuity

So, is there really a right time to buy an annuity? The answer is yes and no, depending on the type of annuity you get. Ideally, you should start on your initial payments at least 10 years before you retire. Doing so will allow you to maximize the benefits of your annuity on the condition that you don't withdraw from it prior to its maturity. Should you the need the money, the option to withdraw will always belong to you but you will be subjected to a penalty fee equivalent to 10% of its value. The penalty fee assessed is to discourage you from withdrawing before you hit the age of 60.

If you have not maximized your contributions to your IRA, 401K, or other investment venues that come with tax breaks, do not buy an annuity just yet. When you find that you have extra cash to place into your retirement savings after maxing out contributions to these vehicles, it is more likely that the tax-free growth of the money in your annuity will make sense from an ROI point of view. For instance, going into retirement usually involves stepping into a lower tax bracket (compared to your bracket as an employee) - here, an annuity can be a good investment as you will save money on taxes.

You will also encounter disadvantages with annuities. Guaranteed income is a benefit you will gain, but your annuity investment will be locked in for a while. Every withdrawal that you take will decrease your gains relatively because there is a 10% penalty. Aside from that, you will also have to pay hefty fees if you buy an annuity from a devious broker or agent. Your withdrawals will also be considered as ordinary income when it comes to taxes and you will have to pay for it.

Annuities can be a complex investment for the novice investor. Do you need to know more about retirement annuities? Up-to-date information from independent advisors, such as Puritan Financial Group, can go a long way in helping you choose the best annuity from the best provider - talk to your investment planner to find out if a retirement annuity is right for you.


If you are looking for an established life insurance provider, Puritan Financial Group is the way to go. Puritan Financial Group specializes in helping seniors secure their retirement.