Washington Center for Rehabilitation and Nursing on the Benefits of Annuities

The stock market (and, in effect, many people’s retirement accounts) took a beating in March as the Dow Jones Industrial Average went from around 29,000 to 18,000 in a matter of weeks due to the coronavirus threat. While the market leveled off and did gain around half of those losses back by May, the crisis leaves many wondering if there are more secure ways to ensure their financial situation upon retirement.

Washington Center for Rehabilitation and Nursing would like to discuss the ways an annuity might be the right decision for you.

What Is an Annuity and What Are the Different Types?

An annuity is an account that pays you in increments from your own savings. There are two types of annuities.

• Immediate Annuity: You make a single premium payment and receive regular, guaranteed income payments right away.
• Deferred Annuity: You make a lump sum payment or several premium payments and receive regular, guaranteed income payments in the future.

The advantage of both types is that you can pay into them with pretax money, similar to a 401(k). But unlike 401(k)s, there are generally no annual contribution caps or limits on annuities.

Is an Annuity Right for You?

If you are in any of these situations, an annuity may work better for you:

• A savings account or certificate of deposit (CD) that is earning a low rate of return.
• A 401(k) that’s sitting dormant after leaving a job.
• Turning a large amount of money (an inheritance, for example) into a steady income.

There are also several ways to customize an annuity. You can designate a beneficiary so that person can receive regular payments in the event of your death, and others allow you to withdraw a certain percentage early (prior to retirement) without incurring penalties, like you would with a 401(k) or IRA.

Most banks and insurance companies can provide you specific information and options for annuities.

To learn more about Washington Center for Rehabilitation and Nursing and all of the services they offer, visit https://washington-center.facilities.centershealthcare.org/.