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What’s the Benefit of an Annuity in Retirement?

An annuity is a savings plan that you receive interest on and you’re paid a monthly allotment for the duration of this contract. It is an additional stream of income in retirement to go along with your 401K, Social Security, and any life insurance premiums that you get. So, you have streams of income that come in to you for retirement. An annuity is different than a 401K. A 401K is pre-tax. And when you take distribution of a 401K, you’re taxed at a minimum of 30%. An annuity is guaranteed lifetime income. Now you still pay taxes on it, but you know what your bottom line is. Your 401K is limited to the amount of money that was saved. So, it’s just an additional stream of income coming in retirement.

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