Fixed annuities guarantee lifetime income payouts based on a number of factors. In EHow’s article “About Fixed Annuity Rates,” John Hewitt discusses the investments which guarantee a certain rate of return. Fixed annuity rates change periodically like all interest rates, and your rate is usually locked in when you purchase your fixed annuity. Insurance companies invest fixed annuity funds in assets like bonds or treasury bills that have fixed returns. Fixed annuities are safe and dependable investments because they guarantee your rate of return and pay you monthly income through retirement.
Your fixed annuity rates are based on your age, health status, gender, and the market interest rates. One fixed annuity benefit that investors like is the tax deferral. Taxes are deferred on your principal and interest earned until you start receiving your payments. Of course the guaranteed returns are popular as well. Other investments don’t have guaranteed payouts, especially when they are tied to a stock market. Fixed equity indexed annuities are a hybrid annuity that offers benefits from both traditional fixed annuities and those tied to a stock market index. Fixed annuities, like most investments, are not right for every investor. But if you plan on keeping your money through the maturation period, find a rock solid insurer, and get expert advice on choosing a fixed annuity, this investment could help finance your retirement.