Variable annuities can be a good option for individuals looking for tax-deferred growth and guaranteed income in retirement. Here are some benefits of variable annuities:
1. Tax-deferred growth: With a variable annuity, you can invest in a variety of funds and the earnings on your investments grow tax-deferred until you make withdrawals.
2. Guaranteed income: One of the key features of variable annuities is the option to convert your account balance into a stream of guaranteed income payments for life. This can provide a steady income stream during retirement.
3. Investment choices: Variable annuities offer a wide range of investment options, including equity funds, bond funds, and balanced funds. This allows you to tailor your investment strategy based on your risk tolerance and investment goals.
4. Death benefit: Variable annuities often come with a death benefit that guarantees a minimum payout to your beneficiaries if you pass away before annuitizing your contract.
5. Estate planning: Variable annuities can be used as part of an estate planning strategy, allowing you to pass on assets to your heirs while potentially reducing estate taxes.
It's important to note that variable annuities come with fees and expenses, and the performance of the underlying investments can vary. Additionally, withdrawals made before the age of 59 ½ may be subject to a 10% penalty. It's advisable to consult with a financial advisor to determine if a variable annuity is a suitable option for your retirement planning goals.