Purchase Structured Settlement

When many think of annuities they think of the ultimate level comfort, guaranteed income for life. Month after month routine checks floating in so you can do whatever it is you please. Over all that sounds pretty good, but it doesn’t mean it should be your financial goal now. Hiring expensive tax attorneys is often good for wealthy people, but you
wouldn’t need one would you?

Get Out of Debt First

Having routine payments won’t do you any good if you don’t know how to live within your means. The whole point of the annuity is to fix your means forever. The best way to take control of your financial life is to beat down debt. In fact if you already own an annuity I would sell my annuity to pay down your high interest debt. You’ll be able to come back later at a proper time and get a new better annuity. Once you’re out of debt you’ll want to start saving for retirement.

Use Tax Free Growth Plans First

The first place you want to invest your savings is tax free growth plans. I prefer plans where I can choose my investments simply because I don’t believe buy and forget is the best choice for me. However, if your company offers a match you must take advantage of it first. A guaranteed 50 – 100% return in your first year of investment really helps the upward momentum. Next, I would invest all the way to the max allowed by the IRS into an IRA. Some would say a ROTH IRA, but I don’t trust the government won’t tax them later, so I would rather get my tax savings now. That’s just me with no political insight on the matter. After you max your IRA finish maxing out your 401k plan. I know it’s limiting, but it’s worth it for the decades of tax free growth.

Time to Buy Annuities

Now that you’ve maxed out your retirement plans ( The money is really growing now isn’t it?) it’s time to purchase an annuity, but not the type you generally think of. My favorite choice is the variable annuity for this phase in your game plan. The variable annuity allows you to invest in mutual funds wrapped in an insurance plan. Essentially the mutual funds grow tax free within the annuity, the insurance company will guarantee a certain rate of return as long as you hold the variable annuity for so many years and they will guarantee all of your principle. Obviously the terms vary a little bit from plan to plan, but this is another great way to invest in good mutual funds.

Time to Retire

Now that you have enough money to retire, and you’re of age for your retirement accounts, you can purchase annuities for a life time of income and beyond. I would begin with an annuity to cover all of your expenses and general wishes for the rest of your life. Then I would create separate annuities for each person in your life you would like to pass wealth too. I like this method because you can often set an individual up as the benefactor of the annuity and it bypasses the need to be put in a will. This way you won’t offend anyone that you’re helping your nephew more than your son or whatever your personal situation may be. My other favorite choice for annuities is to set them up for your favorite charities. Instead of writing one big check you can give them monthly support as long as they meet your standards.

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