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When A Fixed Annuity Should Be Purchased

According to Cincinnati.com article “Whether and when to buy fixed annuities,” J. Brendan Ryan says that there are good reasons to buy a fixed annuity.  They offer safety to investors, much like Social Security but with a higher monthly payout off which you could actually live.  While they are subject to the financial stability of the insurance company that will be making your payments, doing research and choosing a stable insurer should offer you a secure future.  The older you are when you start receiving your annuity payments, you will receive a higher amount of money each month in your income checks.

Ryan believes that it’s important to buy your annuity early and have it deferred until a later time in your life.  While immediate annuities work for people who haven’t purchased their annuity at an early age, buying early and deferring your payments until retirement will defer the taxes on your interest until you start receiving payments.  Another reason to buy an annuity early is that you’ll receive a higher monthly income based on the mortality tables.  Most annuities guarantee your income with the mortality tables in effect when you purchase the investment.  As life expectancies increase, your payment would be less had you purchased your annuity 20 or 30 years later in life.  Sometimes the new benefits offered by insurers do make it wise to transfer your money to a new fixed annuity product though.

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