Why Might Someone Choose a Variable Annuity?
Variable annuities can be attractive for several reasons, particularly for individuals planning for retirement.
1. Investment Growth Potential
Variable annuities offer the possibility of higher returns through a range of investment options, including stocks and bonds. This flexibility allows investors to allocate their funds according to their risk tolerance and financial goals.
2. Tax-Deferred Growth
Contributions to variable annuities grow tax-deferred until withdrawal, enabling individuals to accumulate wealth without immediate tax liabilities. This feature is particularly beneficial for long-term retirement planning.
3. Income Guarantees
Many variable annuities come with riders that can guarantee a minimum level of income during retirement, providing financial security to the annuitant.
4. Customization and Flexibility
Investors can customize their annuity contracts by selecting various investment options, riders, and features that align with their retirement objectives, making variable annuities a versatile tool.
5. Estate Planning Benefits
Variable annuities can be beneficial for estate planning, offering features such as death benefits that provide financial support to beneficiaries while avoiding probate.
In conclusion, while variable annuities come with complexities and costs, their potential benefits make them a valuable consideration for retirement investing.