Annuities are usually very safe vehicles for investing. They are backed by the full faith of the insurance company with whom you choose to invest. It is important for you and your agent to pick an established, well-rated company. There are many independent groups which rate the overall strength of insurance companies. AM Best, Moody’s, Standard and Poor’s are a few of the more prominent companies providing these services nationwide.
Annuities can have significant tax advantages over other investments. Alternatively, C.D.’s and many other income generating accounts are taxable whether or not the interest is withdrawn. If you reinvest the interest back into your annuity principal, you owe no taxes. This way you can defer taxes for your lifetime in a non-qualified annuity. * Thus, your interest compounds for many years and your nest egg can grow larger for later use. Albert Einstein said compounding interest was one of the great inventions of the world. Einstein understood that this simple, powerful concept was an important key to wealth accumulation.
A qualified annuity requires a mandatory distribution at age 70 and 1/2. (You should always consult your accountant for tax advice.)
