Insurance

Many people would rather aim for financial security rather than profits when it comes to planning and saving up for their retirement. That is totally reasonable, given that our work options become more limited when we reach retirement age, yet our expenditures remain the same, if not more. We need a solid plan we can rely upon as we enter our golden years, and many people find that safe solidity in buying fixed annuities.

What are fixed annuities? Fixed annuities are basically a type of annuity that you buy in exchange for a set amount of payments every single pay period. Just how much you will get depends on the factors prevailing the moment you sign your contract. Even if inflation fluctuates or even if the market rates have moved greatly in the years while you have your annuity, the amount you will be paid will remain the same.

Your Security Depends on Where You Bought Your Annuity

That is also the biggest factor why fixed annuities are secure. No matter what happens in the market and even if the value of your investment drops, you will still be paid the same amount every pay period. You don't have to worry about losing money because the economy is bad. As long as the insurance company from which you bought your annuity is financially stable, you will have your money coming to you for the entire duration of the annuity.

Thus, it is important for you to be absolutely picky when it comes to choosing which insurance company from which to buy your annuity. The best way to judge the stability of an insurance company is by looking at its ratings with rating agencies like AM Best and Moody's. The higher their rating is, the less risk you will be taking when you get an annuity from them.

The insurance brokers you may approach regarding this may try to sway you into buying an annuity that has a higher interest rate from a company with lower ratings. Whatever you do, don't allow yourself to be coaxed into taking that decision. The risk is too high and you may end up losing your life savings, thus losing the security you worked for to enjoy on your retirement.

We all want to enjoy some measure of financial stability when we reach our retirement age. Buying fixed annuities is one option that can give us that stability we seek. However, we must be careful in purchasing our annuities in order to avoid any unnecessary risks.