Annuities Information

What is an annuity?

Annuities are investments protected by an insurance contract. They provide for tax-free growth and can provide a lump sum payment at the end of term or provide for immediate or future income streams in the future. 

A fixed term annuity is a product in which your interest rate is guaranteed for a defined period of time.  They often offer a greater interest rate than CD's, money markets and bonds.

Fixed term products offer guaranteed interest rates while indexed or variable products have fluctuating performance. But both may offer the benefit to protect the initial investment.  And some will offer a separate account that grows at a fixed rate designed for guaranteed lifetime income.

What annuity options are available?

An immediate annuity can begin paying you right away. You can choose whether you want your income guaranteed for a specific time period or if you want lifelong payments. The amount of your payments is calculated based on your principal and your life expectancy.

A deferred annuity is broken up into two phases:

  • Accumulation: This is when you add money to your annuity, whether you pay in a lump sum or you make a series of payments. You can continue to let your account grow tax-deferred until distribution.
  • Distribution: This is when you begin withdrawing money from your annuity.  This can be done as systematic withdrawals or as an annuitized lifetime stream of income.

Social Security Benefits are similar to a deferred annuity.  And the decision of how and when to take your social security benefits as an individual and a couple, for most , will have a significant impact on lifestyle in retirement.  If you would like a financial adviser to help you with these decision, feel free to click and request a call.

Why buy an annuity?

Fixed, indexed annuities, and variable annuities with protection riders, provide individuals with an alternative investment strategy with protections and guarantees, for those who are more conservative or those that want to create their own pension type income in retirement.  

Fixed annuities may often offer a better interest return than bonds, money market or saving accounts for the "safe" money in a portfolio.

Lifetime annuities provide a guaranteed income payment for life providing added financial protection for living into very old age.

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