Today on the Finance Flash Go! podcast, it’s all about annuities!
An annuity is a contract between you and an insurance company. Basically, you agree to make a lump-sum payment or series of payments and, in return, receive regular disbursements, beginning either immediately or at some point in the future.
These are insurance contracts that promise to pay you regular income either immediately or in the future. Therefore, many people find them useful and buy them for retirement. If they are not sure that their money will last until they die, they buy an annuity to ensure that they always have some “income.”
Annuities come in three main varieties—fixed, variable, and indexed—each with their unique risks and payout potential.
Notably, the income receives from an annuity is taxed at regular income tax rates, not long-term capital gains rates, which are usually lower.
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