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Annuities
There are many different ways to think about retirement, and your dreams may not appear on anyone’s bucket list but your own. No matter how you envision retirement, having the freedom to live life your way will depend, at least in part, on having a secure source of reliable income. Annuities are one of the few sources of retirement income that can guarantee1 income for life.
How do annuities work?
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It really depends on the annuity. Some are designed to help you accumulate savings for long-term goals like retirement. Other annuities focus on providing a guaranteed income stream that begins either immediately or in the future.
Do I need an annuity?
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A longer lifespan can translate into a longer retirement, so your savings may have to go further and last longer. A deferred annuity can help you to accumulate assets more tax efficiently and, when the time is right, convert them into income you can’t outlive.
An annuity may be right for you if…
You’re nearing retirement or you’re already retired
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You thought saving for retirement was the hard part. Now you need a steady retirement income.
You’d like to minimize the taxes** you pay on your annuity earnings
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You don’t need the money right now. So, you’re looking for a way to accumulate funds while deferring tax payments.
You’re looking for an alternative to a certificate of deposit
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You want your money to work hard for you. So, you’re looking for something with the potential for higher returns.
Two basic types of annuities
Income Annuities
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Income annuities can provide you a guaranteed*, reliable income stream that you can’t outlive. If you’re nearing retirement age or are already retired, income annuities can help supplement your income through a series of payments throughout your lifetime or for a specific period of time.
Deferred Annuities
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Deferred annuities can help you accumulate assets for retirement by offering you a fixed rate of return and tax-deferred growth. And with deferred annuities, your investment will never decline in value.
What annuities can offer
Guaranteed, reliable income*
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One of the most difficult problems in retirement is determining how much income you’ll need. Annuities provide reliable income that you can use however you wish.
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Tax-deferred growth
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Taxes on annuity earnings are deferred until you begin taking money out***. That may help you minimize the amount of tax you pay.
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Flexible income options
Everyone’s situation is different. Annuities offer income options and choice of frequency so you can select what’s right for you.
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* Guarantees are subject to the claims-paying ability of the issuing insurance company.
** Consult with a professional tax and/or legal advisor before taking any action that may have tax or legal consequences.
*** Withdrawals of taxable amounts from an annuity are subject to ordinary income tax, and if taken before age 59 1/2 may be subject to a 10% IRS penalty.
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