Fixed Annuities
A fixed annuity is a retirement savings option that allows for tax-deferred growth at a guaranteed fixed rate over a set period, usually between 2 to 10 years. This means that the interest you earn isn’t taxed until you withdraw it, and your return is guaranteed for the duration of the selected term. It’s similar to a Certificate of Deposit (CD) from a bank or FDIC-insured institution, but is provided by an insurance company. The guarantees of a fixed annuity are backed by the financial strength of the insurance company, which can be assessed through its financial ratings.
Connect or Book A Call
Fixed Indexed Annuities
Fixed index annuities (FIAs) are a type of annuity contract that offer investors growth potential along with complete downside protection. They also allow you to convert retirement savings into guaranteed lifetime income through annuitization. The majority of these annuity contracts have a surrender charge schedule for a specific period. Most FIAs have liquidity provisions that allow you to take money out annually and penalty-free if needed. Also, FIAs can provide a death benefit from the accumulation value or an attached benefit rider. It’s like having the best of both worlds. Think of FIA’s having 2 important parts: Growth & Income.
Growth:
The interest earned on FIAs is tied to the performance of an external index, like the S&P 500®, but your principal is safeguarded against any losses. Additionally, you can choose to allocate part or all of your funds to a fixed account that earns a guaranteed interest rate. Growth can be achieved with almost stock market like returns.
The interest credited to fixed index annuities (FIAs) is tied to the performance of an external index, like the S&P 500®. Although your investment isn’t directly placed in the index, you can earn index-linked interest if the index performs well during the specified term. If the index performs poorly, you will receive zero index-linked interest.
Additionally, you have the option to allocate some or all of your funds to a fixed account that offers a guaranteed interest rate.
Income: (Income Rider)
In FIA’s income is achieved with income riders. Income Riders attached to fixed index annuities (FIAs) provide an efficient way to secure a lifetime income guarantee that can begin at a future date of your choosing. These riders can be added during the application process, and most require an annual fee for the duration of the policy. This fee is deducted from the accumulation value, not the value of the income rider, meaning they are calculated separately within the FIA policy.
Essentially, Income Riders function like a phantom account, creating a theoretical balance that is used solely to determine your first lifetime income payment. The key advantage is a reliable income stream you can never outlive—essentially, your own personal pension.
Connect or Book A Call
Immediate Annuities
Single Premium Immediate Annuities (SPIAs) have been available in the United States for centuries and remain the best option for securing immediate lifetime income. They serve as a cornerstone for many retirement income strategies, providing a guaranteed income floor alongside Social Security or employer pensions, if you have them.
SPIAs are classified as fixed annuities and are issued by life insurance companies, making them subject to state regulation. This type of annuity is a straightforward risk transfer solution for those needing immediate income. The main factor in SPIA pricing is your life expectancy (or joint life expectancy for couples) at the time payments begin. Contrary to common belief, interest rates play a secondary role in pricing; it is life expectancy that primarily determines SPIA costs.
Consider Buying an Immediate Annuity If:
- Your Social Security and/or pension benefits don’t fully cover your regular expenses
- You are about to retire or are already retired
- You have more than $250,000 in retirement savings
- You have average or above-average health
- You want greater certainty in retirement and prefer an insurance product
An Immediate Annuity May Not Be Right for You If:
- Your Social Security and/or pension benefits fully cover your regular expenses
- You are several years away from retirement
- You have less than $250,000 in retirement savings
- You have below-average health
- You’re focused on growing your money
Connect or Book A Call
Deferred Annuities
A deferred income annuity, commonly referred to as a DIA, starts making payments at a future date, usually between 2 to 40 years after the premium is paid. This differs from immediate annuities, which begin payments within one year. During the deferral period, the insurance company invests your funds on your behalf. The longer you wait to start receiving payments, the larger those payments are likely to be.
These tax-deferred, long-term pension products allow you to select the start date for your retirement income when you apply. Issued by life insurance companies, the lifetime monthly payments are primarily determined by your life expectancy (or joint life expectancies) at the time payments begin. Interest rates (i.e., fixed rates) play a secondary role in the pricing.
Consider a Longevity Annuity If:
- Your Social Security and/or pension benefits do not cover your regular expenses
- You are a pre-retiree or in the early stages of retirement
- You have more than $250,000 in retirement savings
- Your health is average or above average
- You want greater certainty in retirement and prefer an insurance product
- You don’t need immediate access to your funds
A Longevity Annuity May Not Be Right for You If:
- Your Social Security and/or pension benefits adequately cover your expenses
- You are younger than 45 or older than 75
- You have less than $250,000 in retirement savings
- Your health is below average
- You are focused on growing your money
- You need immediate access to your funds
Connect or Book A Call
Ready for a Worry-Free Retirement?
Let us help you build a solid financial plan with customized annuities.
Book A Call
