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ANNUITIES................Are they right for you?
What is an Annuity?
With the future of Social Security in question and company pensions quickly becoming a thing of the past, retirement is no longer as certain as it once was. An annuity is a secure investment that can guarantee income for your
Why is an Annuity so important?
planning can be a bumpy road. Without the right investment vehicle, you may outlive your savings or suffer a lower quality of life to make ends meet. The government doesnt make it easy, either. Taxes, Medicaid, estate planning, and a variety of other factors add to the uncertainty, putting your financial security in question.
is your opportunity to live your dreams. Dont spend it on a modest income or, even worse, burdening your family financially. With an annuity, you can guarantee income for the rest of your life, so you can enjoy your golden years without worrying about the finances.
How Do Annuities Work?
Great question! Each type of annuity works differently and offers a unique set of advantages. The two main types are tax-deferred annuities and income annuities. There are also annuities that offer a mix of features, combining elements of tax-deferred and income annuities into a single product.
Tax-Deferred Annuities: To Help Save for Retirement
People saving for may want to invest in a tax-deferred annuity after they have maxed out their 401(k) and IRA contributions.1 Like these other tax-deferred accounts, earnings compound over time without being eroded by taxesgiving your investments the potential to accumulate more than they would in a taxable account. You don't pay taxes on annuity gains until you start withdrawing assets in retirement, at which time your tax bracket may be lower. Keep in mind that annuity gains are taxed at ordinary income tax rates when funds are withdrawn. Annuities have additional expenses not found in mutual funds, which will impact your returns.
Tax-deferred annuities have no IRS contribution limits so you can invest as much as you want for. You also have the option to create a guaranteed stream of income payments in retirement.
Tax-Deferred annuities are either variable or fixed.
Assets in a variable annuity are invested in a way that provides greater market growth potential; however, you could have a loss. Variable annuities are usually appropriate for those who may be further away from retirement and better able to handle the market's short-term ups and downs.
Assets in a fixed annuity offer a guaranteed rate of return for a number of years and, generally, guarantee your principal similar to a CD, but your investment grows tax deferred. Please be aware that, unlike CDs, tax-deferred annuities are not FDIC insured and taxable amounts withdrawn from an annuity prior to age 59½ may be subject to a 10% IRS penalty. Fixed annuities are more suitable for conservative investors who are closer to retirement and want to protect their investment from market volatility.
Income Annuities: For Immediate Income in Retirement
People in or near may want to invest in an income annuity. Because annuities are insurance products, they can offer guaranteed income for life. Income annuities have become more popular as life expectancies have increased and people have started to fear outliving their assets. By creating a reliable lifetime income stream, an income annuity may allow you to be more aggressive with other investments in your portfolio, which could provide you with more growth potential.
Like deferred annuities, income annuities can be variable or fixed.
A variable income annuity offers an income stream that includes growth potential that may help you stay ahead of inflation. This income is guaranteed for life, but the actual income amount will vary with the underlying performance of your investment.
A fixed income annuity offers a guaranteed, fixed-income amount for life, or for a certain period of time. Your guaranteed income payment cannot be affected by market volatility, which helps to shield your income from market risk.
