At its heart, an annuity is an insurance contract. Fixed annuities guarantee payments to owner in advance which eliminates all investment risk. We are a big supporter of this type of the contract. On another side of the spectrum a variable annuity contract the risk is shifted to the purchaser and will depend on market performance.
When bank CD rates are so low you can get a five-year contract with a guaranteed interest much higher than the rate offered by banks. Keep in mind that annuities come with restrictions and limitations, so it is important to do you homework. Feel free to order our WEALTH BUILDER kit using the order form on our home page.
Magellan Equity Group professional can help you explore effective ways to go from savings for retirement to living on your hard-earned savings. In this one-on-one conversation, we’ll discuss how you hope to live in retirement-and how your current assets may be able to support that life stile. We’ll determine if an annuity has a place in your portfolio. This preliminary review is going to FREE with absolutely no obligations or commitments on your part.
An annuity could be a good choice if you want to:
» Increase your tax-deferred earnings, and may be already taking full advantage of all available 401(k), IRA or other tax-deferred plans
» Receive guaranteed income for life or a set period of time
» Create a plan with flexible investment, income and legacy choices
Qualified Versus Nonqualified Annuities
A qualified annuity is one that is purchased within a retirement account, such as a 401(k) or IRA. A nonqualified annuity is one that is purchased outside of such a plan, with dollars on which you’ve already paid federal income tax. Basically, the annuity is the same, but the tax consequences may not be. You may want to consult a qualified tax expert before investing.
Variable annuities offer a range of investment choices through sub-accounts that include stocks, bonds (or a blend of the two) and fixed-income instruments. The withdrawals you eventually make from your variable annuity contract will be based on the value of the underlying choices you select.
Fixed Index Annuities
Fixed index annuities* combine the benefits of a traditional fixed annuity, including guaranteed minimum interest, with the potential to earn additional interest linked to the return of an index. Fixed index annuities may allow owners the flexibility to build their contract to meet their individual needs. Some products offer two indexes, multiple crediting methods, a variety of contract lengths as well as optional or standard premium credit features.
Fixed annuities are retirement contracts built on protection and guaranteed returns, including a guaranteed minimum interest rate. Fixed annuities offer guaranteed retirement income for a set period of time or for your lifetime. They also provide guaranteed return of your initial investment and death benefit protection.
Most annuities are deferred, which simply means that you don’t plan to begin taking income from them right away. However, there is another type of fixed annuity available, called an immediate annuity. An immediate annuity is a popular choice for people already in retirement because it guarantees lifetime income. You can purchase it only with a single lump-sum payment. As with deferred fixed annuities, you can choose to receive income payments for life, or a shorter period of time. Payments are based on a fixed interest rate and can be paid out on a monthly, quarterly, semiannual or annual basis.
To learn more about annuities please click here for BUYER'S GUIDE TO EQUITY-INDEXED ANNUITIES.