Being ready for retirement does not only mean that you have saved enough money. It also means that you feel confident because you have the guaranteed income that you need.
Annuities can be a great asset to your retirement plan. Whether you are trying to increase your retirement savings or you need guaranteed income, there are various annuity solutions that can work for you.
What are annuities?
Annuities are insurance contracts that make payments to you either immediately or at some time in the future. You can purchase an annuity to help grow or protect your retirement savings or to provide you with guaranteed income.
There are many types of annuities. Each one has a unique feature that will help you reach your financial goals. You can be saving for retirement, approaching retirement, or living in retirement. Either way, you can benefit from having an annuity.
If You are...Saving for retirement
A deferred annuity will help you save more for retirement and defer taxes.They are available in both fixed and variable varieties.
If You are...Approaching retirement
A deferred income annuity can help you prepare for retirement. They create a future stream of income while helping protect savings from a fluctuating market.
If You are...Living in retirement
An immediate income annuity can offer peace of mind with a source of guaranteed income that will last as long as you want, or as long as you live.
Types of Annuities
Deferred variable annuities
Deferred variable annuities revolve around funds that have the potential for investment growth. This can involve market risks and result in a loss if the value of the underlying investments falls. Variable annuities are best for those with a longer time to save or those who are able to handle fluctuations in the market. Some variable annuities allow you to protect your investment against loss, while still participating in potential market growth.
Deferred variable annuity with a guaranteed minimum accumulation benefit
A deferred variable annuity with a guaranteed minimum accumulation benefit (GMAB) can give you the potential to benefit from any market increases while also protecting your investment from any market decreases for a specified time period. This protection guarantees that if your account value at the end of the holding period is less than the amount you invested, the company will add an amount that covers any losses to restore the full amount. Also, if your situation changes, the account value is accessible as needed.
Deferred fixed annuities
A deferred fixed annuity offers a guaranteed rate of return for a specific amount of years. Fixed deferred annuities may be more suitable for conservative investors or for those interested in protecting assets from market changes. In this way, they are similar to certificates of deposit (CDs).
However, deferred fixed annuities differ from CDs in that:
- Annuities are not FDIC-insured
- If you make withdrawals before age 59½, you may be subject to a 10% IRS penalty
- Deferred fixed annuities may offer more access to assets than a CD
- Annuity earnings compound on a tax-deferred basis
If you are interested in buying an annuity, speak to a Financial Advisor and make sure that you only buy annuities from financially strong insurance companies. Check their ratings at https://www.ambest.com/home/default.aspx or www.fitchratings.com/site/home.