May 26, 2016 | Leave a comment The annuity is one of the most popular business alternatives offered by banks for a variety of reasons. The annuity creates a contract between an investment company and you, where the insurance company promises to either grow your money or pay through a number of years. The important part of an annuity is that it helps you save for your retirement days. If you haven’t withdrawn an annuity loan, then you can receive regular funds from the annuity after your retirement in order to maintain your lifestyle during retirement days. Types of annuities There are many types of annuities, but, all of them have two basic types of properties such as it can have either fixed rate of return or variable. When you buy an annuity that has fixed returns, it offers you a guaranteed return by investing in securities that are low risk such as government bonds. An annuity that has variable returns has results which vary with the performance of the funds such as stocks. Advantages of retirement annuity The retirement annuity ensures guaranteed income during retirement. It converts the lump sum amount from an employer-owned and also an individually owned retirement plan into a monthly stream of income. A retirement annuity can be offered as part of a company’s retirement plan. The annuities are a popular choice to get back steady income after retirement. With the help of this income, you may also be able to use the money to pay off your financial obligations as well. It offers various kinds of benefits at the same time if compared to the traditional retirement savings funds. Below are the other benefits you can get from retirement annuities. Assured a constant income Annuities assured a fixed income during retirement. Thus, you can get a constant income out of the investment, which provides you a secure and peaceful as well. After all, you know that the money is going to arrive every month and you can use the money for your household expenses and so on. The best part is, you can get the benefits even if your retirement lasts for 40 years or longer. Provide survivor benefits In death, the annuity provides continued lifetime income to the surviving spouse. The amount which the surviving spouse will be receiving needs to be selected at the time of selection of the annuity. Usually, the amounts vary within 50%, 75% or 100% of the amount that the retiree was scheduled to receive. Offer risk-free benefits The most crucial part is, there is no risk of a negative effect of the market fluctuations. You need to manage the investment to get the best benefit from your traditional retirement savings fund. There is the risk of getting lowered income due to changes in the interest rates or the stock market. But, with the retirement annuities, you’ll get the desired benefits and the payments will not change even if the investment markets suffer negativity. Offer tax benefits You can get tax benefits as well. You need to pay taxes on your income from the traditional retirement savings funds, but, the taxes on the retirement annuity payments are due only as the payments are received by the retiree. Depending on the type of source of the funds for your original purchase of the retirement annuities, a part of each of the payments may be tax-free.