Annuities
Interested in a Private Pension / Safe Retirements with Guaranteed Lifetime Income
You Need Life Insurance If You Die Too Soon (Mortality Risk)
You Need an Annuity If You Live Too Long (Longevity Risk)
NEVER Run Out of Money
Secure your retirement – and continue to have income as long as you live (possibly longer!)
So What is an Annuity?
An annuity, simply, is a contract between an investor, or annuitant, and an insurance company. You contribute money to the annuity in exchange for interest growth during the accumulation phase and then you can create an income stream during the payout phase. The period of accumulation can be deferred until a future date or immediate, with an immediate income at a set rate of return. Annuities are a valuable tool for tax planning. Your money grows grow tax free until withdrawn or taken as income, typically during retirement.
Immediate vs. Deferred Annuities
The income from an annuity can be either immediate or deferred.
Immediate: The buyer makes a single, lump-sum payment to the insurance company. This creates an income stream that can continue for a set period or for the rest of your life. SPIAs (single-premium immediate annuity) are a great tool if you are worried about potentially outliving your money, or for funding another investment, such as a life insurance policy.
Deferred: Accumulates and grows with payouts in the future. Contributions can be a lump sum, or over time and be configured as Qualified (before-tax money) or Non-qualified (after-tax money), depending on your age, job status, and tax status.
Fixed, Variable or Fixed-Indexed Annuities?
Fixed annuities provide a modest guaranteed rate of return (typically from 2 – 3.5%) – still far greater than CD or Money Market accounts. Contract periods typically range from 3-5 years, but most policies have withdrawal privileges. A great place to park some money, worry free. Various programs are available for a wide variety of affordable access.
Variable annuities are treated as a market-based security investment where your contribution is invested in funds like a mutual fund (not offered here). They are subject to fees and market risk of principal (meaning, you could lose your money).
Fixed-Indexed Annuities are a modern solution that combines the safety and guarantees of a fixed annuity, with additional growth made possible by access to popular indexes such as the S&P 500. You can participate in some of the growth of the stock market without the downside risk if the market goes down. You can expect a reasonable rate of return without the risk of market exposure.
Guaranteed Lifetime Income and Other Riders
have made indexed annuities a very popular tool in your retirement planning arsenal. These enhancements can maximize accumulation, provide liquidity, offer death benefits and create income in retirement without annuitization (meaning you can stay in control of your principal). Modern income riders mean you can own a retirement asset that can both grow principal AND guarantee a lifetime income. A GLWB (“Guaranteed Lifetime Withdrawal Benefit”) income rider ensures that you will have a guaranteed amount of income every month, like clockwork, for the rest of your life. and preserve a death benefit for a long period of time. By deferring an annuity income rider into the future, your income can continue to grow for the benefit of both you and your spouse. The longer you defer taking income, the more you can increase your “longevity credits.” It can be a great way to add a private pension-like income to your future.
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