An annuity is the sum of money that is paid to an employee at the time of retirement. This payment is not provided by only the company, but a small portion (percentage) comes from a deduction from the employee’s salary. The annuity can be claimed after a certain number of years of employment or at the time of retirement. It is generally the choice of the employee. The following are some of the advantages of the annuity:
- The employee can use the money to make different investments.
- The taxation is deferred on investment growth.
- The employee can withdraw a percentage of the annuity instead of all at once, but there are some conditions if you are withdrawing the payment before the age of 59.
- The annuity is also useful for medical care support.
- If you withdraw the annuity amount at the peak years then you will have to pay less taxes are assigned.
- The annuity amount serves as a complement to other sources of income after retirement, such as a pension payment.
- The employee can use the annuity to start a business to earn more money for retirement.
- Annuity payments can be included in a will for a person’s children to be used for their future.