There are other ways to supplement your retirement plan. While working for an employer put as much money as allowed into a 401k plan, which invests in various financial instruments. If your employer matches your contributions, this is even better. Like an annuity, it can be directed into the financial instruments you prefer, to spread the risk. These could be bonds, stocks and other investments. If you work for yourself there are a couple of Individual Retirement Plans (IRA’s) to investigate, depending on the tax benefits available.

Of course, only by sitting down and talking to a certified estate planner can you really start to get to know all the issues and find the best option for you.

Investing in safe municipal bonds will help you reach a wealthy retirement. They are entirely tax free, therefore, your real interest rate is higher than given by other bonds. Finally, if your home is worth a lot and is too much house for you. Sell it and move to smaller quarters and invest the profit. Under some conditions no capital gains taxes will be paid for the first $250,000 of profit, for the husband and the same for the spouse.

If you are not familiar with an annuity it is essentially an insurance policy or other product that will pay you an income after retirement. Many people use annuities as part of their strategy to have retirement funds available. The way it works is that you make payments into it an then you get payments from it in the future. You can receive monthly, quarterly or annual payments when you need it or you can request one lump sum payment.

The amount of money you pay into an annuity will depend on many factors and whether you have a fixed annuity where you receive a guaranteed payout or a variable annuity which means you will get payments at different times.

Advantages of a retirement annuity fund
One of the biggest advantages of retirement annuity funds and the reason why many people use them is that you can put a lot of money away and defer paying taxes on it. Another reason people like them is because you can put as much money as you want into them each year. In a traditional 401(k) as an example,  you have a limit of the amount that you can put in each year.

For most people this means that you can put money into a retirement fund without worry and your money compounds each year without getting a tax bill from the IRS. This means that your money continues as an investment to work for you. You also have a choice of taking a lump sum or taking payments over your lifetime.
Disadvantages of a retirement annuity fund

Just like any form of investment, there are a few disadvantages to an annuity retirement plan. You must understand that most of the time your retirement income planner may charge a commission of up to 10% when they sell this policy to you. There may be penalties for taking your money out ahead of time especially if you need to take the money out within the first few years after your purchase. These may be steep for the average person using them.

You also may have high expenses in the beginning, especially when you have a variable annuity. Although this may only be 1.25% or higher you will have other types of annual fees that you will want to know about before you purchase an annuity. The bottom line is that you will want to be sure that when you pick an annuity that you have the time and the money to invest over time.

What happens to your annuity when you die?
This is a question that many people ask and this is one of the reasons to talk to a certified estate planner. The annuity will be a part of the total plan. If you have named a beneficiary in the process of purchasing your annuity your beneficiary may get your payments depending on the type of annuity you chose.