An Annuity is…

May 24th, 2011

An annuity is a kind of tax-deferred retirement plan, but it’s usually operated through an insurance company. You pay the insurance company a certain amount of money, and in return that company promises to pay you back with interest over a period of time. An annuity is a simple way to save money for retirement without paying taxes on it right away.

You can pay into your annuity all at once (“lump sum”) or in a series of payments. Depending on your contract, an annuity might start paying you back right away or start at a later date – such as when you plan to retire.

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