State Farm Annuities Benefit Financial Planning for Retirement

State Farm Annuities are financial products designed to help individuals provide financial security for themselves after retirement. An annuity is created when an insured party such as an individual pays an insurance company such as State Farm one single insurance premium that is then distributed back to the insured party over a set period of time. A contract set up by the annuity pays out money until the death of the insured party or until a specified final date, whichever occurs first. By having a sound annuity in place, an individual can greatly lessen the possibility that he will outlive his financial resources once he no longer is receiving an income from a business or career.

State Farm Annuities allows investors who desire the security of receiving a steady sum of money during retirement to select from one of several annuity policies that best suit their personal and financial needs. State Farm annuities rates will vary according to the program selected, the age of the insured party and the amount of the premium invested in the annuity.

The Future Wealth Builder is one of State Farm's most popular annuities programs. It features a flexible premium which the insured party can fund with more than one premium payment over time, and it offers a deferred return, meaning that the insured party will not start receiving payments from State Farm Annuities until at least 12 months following the first payment made to the insurance company. A one year interest rate is guaranteed when selecting the Future Wealth Builder annuity option.

The Future Income Plus option is another of the most popular of State Farm Annuities because it allows the insured to make a single premium payment in order to accumulate wealth with interest until a specific future date. Then, this accumulated amount can then be redeemed upon retirement in one single lump sum or according to an agreed upon payment option, such as on a monthly, quarterly or annual basis.

The Guaranteed Income State Farm Annuities plan is a popular program for individuals who want to transform an inheritance or matured CD account into immediate income. This type of annuity product requires payment of a single premium of no less than $25,000 in order to begin receiving payments one month after this single premium payment and these payments are guaranteed to arrive either for a set term of time or for the life of the policy holder. There are a variety of income payment options attached to this annuity, including income guaranteed for lifetime, income guaranteed for a time period between 5 and 30 years, ongoing income with a cash refund should there be money left in the annuity at the time of the individual's death, and options for continued payment to a survivor of the annuity recipient.

Tax deferment of the money saved by investing in State Farm Annuities is among the most attractive benefits for choosing from among the different annuity options. Because there is no annual contribution limit restricting annuity investments, people who are closer to retirement age will often choose a State Farm Annuity plan rather than a tax-deferred retirement account such as an IRA or 401(K). Funds in the annuity keep compounding interest without being depleted by taxes, allowing for the total amount of money invested to be working for the investor as each year progresses toward retirement.

State Farm Annuities can help a policy holder supplement other retirement income streams such as pension plans and government programs like Social Security. Annuity buyers, however, must be aware that there are also a few downsides to these investments. They include high commission fees in some instances as well as high surrender charges if the policy holder decides to withdraw money from an annuity within several years of opening the account.