Split-Annuity Strategy – Enhancing The Post Retirement Funds

Annuity retirement plans have surpassed all other types of strategies available for planning a peaceful life after retirement. In order to add value to the benefits offered by these retirement vehicles, you can select the split-annuity strategy for yourself. This strategy is an impressive way to arrange for suitable returns on your investments in the annuity plan.

What Is Split Annuity

By following the split annuity strategy, one can divide his or her investments in an immediate fixed annuity and deferred fixed annuity. This will facilitate the investor in two significant ways:

• The immediate fixed annuity investment promises guaranteed returns and you become eligible to receive a fixed income in the initial years of investment.
• The deferred fixed annuity part allows the investor to accumulate tax deferred funds and start receiving the fixed amount as and when required.

Thus, a split annuity plan can arrange for funds in the initial years as well as make arrangement for income, when these funds are used up by an individual after his or her retirement.

Combined Benefits Offered

Unlike individual investment plans, this combined investment vehicle can offer more significant benefits. By adopting a split annuity plan, an investor can receive immediate returns during initial years of retirement. This will facilitate him to tackle immediate expenditures required after relieving from the services. However, it would not be a wise act to consume the entire investment returns in the very start. Thus, a split annuity can offer the advantage of simultaneously growing funds for future needs.

Things You Must Know

The annuity plans have been serving as appropriate investment ways for individuals, who want to plan for their retirement life. Here are few important aspects of these plans:

• First of all, these plans are facilitated by insurance companies and thus, you need to locate the best company in this field.
• You can either make a lump sum investment or can fix installments for paying the premiums for your investments.
• The surrender charges are incurred on the investor, in case he or she wishes to surrender the annuity before maturation.
• The tax penalty of 10% is faced by the investor in case of surrender before the age of 59 and half.

The retirement life is funded by Social Security benefits, combined with returns from retirement investments and personal savings. Thus, a split annuity retirement strategy can certainly lend a helping hand in arranging good amount of funds for your retirement.