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An annuity is a contract between you and a life insurance company. Annuities can be very useful in retirement planning:
Annuities allow you to save on a tax-deferred basis without paying taxes on interest earnings until you begin to withdraw them. There are very few limits on the amount of money you can put into a non-qualified annuity, unlike a 401(k) or IRA.
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Which Annuity is Right for You? |
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It is important to work with a professional who knows and understands the differences between all the annuities that are out there. The professional must first take the time to understand your needs and goals to help you have a worry free retirement. Our professionals will do whatever is possible to help determine which annuity is best suited for your individual needs.
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Immediate annuities are often used when someone wants to receive a constant flow of income over a specified period of time. For example, you might use an annuity if you would like to receive a set amount of income monthly, quarterly, or annually over the next 10 years. When the 10 years is over, all the money paid into the immediate annuity contract would have been paid back to you, plus any earnings.
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Index annuities have grown in popularity over the last few years due to tremendous volatility in the equity markets. In fact, it is estimated that there was an $11 trillion loss in the market value of peoples’ retirement accounts since the year 2000. Index annuities are fixed annuities that provide a peace of mind solution to people worried about today’s volatile markets. A benefit with index annuities is that you have the protection of your principal while you earn interest linked to upside market potential, without the potential for losses in down markets. Also, index annuities may lock in market-linked interest earnings yearly. These products can help people protect their retirement assets in virtually any market condition.
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Traditional Fixed Annuities |
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This type of annuity provides a client with a guaranteed rate of return each year. There are two different types of traditional fixed annuities, and the major difference is how long the annuity product will lock in the interest rate guarantee. Both types provide tax deferred interest accumulation and always have a guaranteed minimum interest rate every year (this is the guaranteed minimum rate of interest the annuity product will ever credit and is generally 2% or 3%).
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