Annuity Products
As the baby-boomer generation ages and Social Security’s sustainability is debated, more and more of the responsibility associated with retirement falls to the individual. Being able to provide a consistent stream of income during your retirement years is essential in order to maintain your standard of living, health, pay your bills, and provide for any assisted care later in life. It’s important to start thinking about this source of income early and often.
Money sitting in a savings account accrues very little interest. While it’s important to have a saving account that you can rely on, it’s money that isn’t actively working for you. There are many ways in which to invest money that will gain value for when you retire. Annuities are opportunities to pay, either in a lump sum or in payments, to an insurance company. This money is then used by the insurance company for other investments to allow them to make money. In return, you are guaranteed* a set amount of money in distributed payments after you reach a specified age. This is one way in which to make sure you have a steady stream of income after you retire.
At Income for Life, we know that picking investments such as annuities can be tricky business. There are over 2,000 insurance companies which you could work with, all with different terms and conditions. So how do you choose? At Income for Life, we look for the very best annuity options that have the highest payouts and lowest fees to include in your retirement plan.
“As powerful a tool as these FIA’s can be for a safe-money return, It is their ability to simultaneously provide you with a guaranteed lifetime income stream that makes them so darn attractive.”
Fixed
Pros
- One-time Commitment
- Fixed Interest Rate
Cons
- Low Interest Rates
- Surrender Charges
*Variable
Pros
- Opportunity for Growth
- Income Riders Available
Cons
- Dependent on Market
- Surrender Charges
- Possible High Fees
Immediate
Pros
- Predictable Income
- Immediate Payouts
- Stable Income Stream
Cons
- Can’t Withdraw Additional Funds
- No Growth Opportunities
Fixed Index
Pros
- Likely Higher Interest
- Guaranteed Protection Against Down Market
- Linked to Market
Cons
- Withdrawal Penalties
- Surrender Charges
- Market Participation Changes
*Variable Annuities
More Growth, But More Risk
Immediate Annuities
Instant Income Planning
An immediate annuity is an annuity contract that is purchased in a single lump-sum payment. This single lump sum then guarantees immediate distributed payments to the individual who purchased the plan. Ideally, individuals who have concerns about their savings or other retirement plan options running out may want to consider this investment option.
Some immediate annuities can have drawbacks that others do not such as the annuity not paying out to the family or estate if the individual passes, where other forms of annuities will. Therefore, immediate annuities are typically not advised for individuals in poor health.
Many different factors go into the purchasing of immediate annuities and the return on the money you spend. If you have questions about whether an immediate annuity is a viable option for your retirement plan, contact the retirement income planners at Income for Life today in order to find the best fit for you!
Fixed Annuities
Best Guaranteed Interest Rates
Prior to 1952, the only type of annuities available for purchase and inclusion in a retirement plan were fixed annuities. These annuities involve entering into a contract with an insurance company that then will guarantee a return on your invested principal plus a set, fixed interest rate. These investments are considered almost as safe as investing your money in a certificate of deposit (CD).
Like we mentioned under variable annuities, fixed annuities allow you to defer paying taxes on any income that is currently invested and when it is distributed at the set contract dates you only have to pay your regular income tax rates, instead of higher rates that can come with other investments.
Many annuities can have complicated rules and restrictions. For example, you may receive five percent interest for the first year or two, but then only three percent for the years following that. Don’t worry about trying to find the best annuities and having to read all the fine print. At Income for Life, we’ve already dug into the fine print for you!
Fixed Index Annuities
Best Of Both Worlds
A fixed index annuity is a new product in the annuities marketplace. It combines benefits from the market that can help improve your return on investment while still helping to reduce the risk involved in this type of investment. Much like a fixed annuity, fixed index annuities offer a guaranteed principle and set terms in which the principle will be invested during.
The main difference in a fixed index annuity is that the interest returned on the principle is based on stock market indices. This boils down to if the section of the stock market your money is invested in does well, you will see a higher return. If it does poorly, you will not compound any interest for that year.
You can reap the reward with a much lower risk to your principal investment. Find out more when you talk with a specialist at Income for Life today!
