Annuities:
Understanding the Benefits
Understanding
Annuity Benefits
An annuity is an arrangement with an insurance company to receive money on a specified timetable. Typically, this agreement allows you to receive guaranteed* income for life. Essentially, the risks involved with an annuity differ according to its nature. For example, fixed and fixed indexed annuities (FIAs) will not lose money if the market falls. However, variable annuities may lose money in a market drop. Because one of our key beliefs is safety, we strive to help you select an annuity product that offers protection. Additionally, a fixed indexed annuity can provide you with a reasonable rate of return** over time.
Fixed Indexed Annuities
An FIA provides the benefit of keeping your money safe. This is because it does not put your money into the stock market. Although the FIA is based on the performance of an index, your funds are not directly invested. If the market increases, you can benefit from a respectable rate of return.** However, if the market is down, you will not lose money. The insurance company sets aside a reserve to protect the money. The contract and the strength of the insurance company will protect you.
Taxes on Annuity Income
During the first stage of your annuity contract, your money increases tax-deferred. Taxes are only paid when the money is withdrawn. If you want to reduce the present impact of taxes on your retirement strategy, an annuity product could help.
Additional tax breaks may also apply. For example, individuals under the age of 59 1/2 who receive a lump amount from a previous employer’s 401(k) as part of an early retirement or severance package. In this scenario, you would ordinarily have to pay high taxes. However, if you convert the money into an annuity, you may be able to defer the taxes. Of course, you should always contact a tax advisor regarding questions like this.
Learn More
Want to know more about how to secure guaranteed* income for life with an annuity? We can teach you. Contact us to schedule a meeting or reserve a spot at our educational sessions. We can educate you on options for protecting your retirement retirement, including annuities. We’re always here to help.
