Understanding the Benefits

Benefits Of

Annuities For Retirement

Fewer employers are offering retirement options. You may be looking for ways to protect and grow your savings. Fixed indexed annuities are a part of a broader strategy that can help you build, preserve and protect retirement income.

Specific Benefits of a Fixed Indexed Annuity

Tax Deferral

The earnings on fixed indexed annuities (FIAs) accumulate tax-deferred. Therefore, you won’t have to pay taxes on interest earned on your annuity until you withdraw it. Furthermore, withdrawals are taxed as ordinary income. By compounding interest, you can accumulate money faster. However, an additional 10% federal tax might apply if retirees take out payments before they reach the age of 59 1/2.

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Indexed Interest Potential

Your annuity is linked with an index. As a result, your annuity earns indexed interest on the growth, if it is positive. However, due to the fact that you aren’t actively participating in the market, you aren’t putting your money at risk.

Income Protection

FIAs can provide you with a degree of protection that may make you more confident in your retirement strategy. Significantly, this protection can be helpful to you in three specific ways:

FIAs are designed to help you accumulate funds to protect your principal. 

Annuities provide retirees with income throughout their lifetime. The insurance company guarantees these payments.*

*Insurance policies are backed by the claim-paying ability of the insurance carrier.

If you pass before you begin taking payments, FIAs can provide your loved ones with a death benefit. Additionally, if structured properly, the death benefit can avoid probate.

FIAs in the Stock Market

Fixed indexed annuities are insurance products. However, FIAs aren’t invested in the stock market. The insurance companies use what’s called an “index.” Even though these products aren’t directly invested in the market, they earn interest based on an external index. The insurance company guarantees a minimum interest rate. When the stock market is down, it’s the company that bears the risk, not you. The interest rate of an FIA remains the same, regardless of stock market fluctuations. Your FIA remains unaffected if the stock market falls.

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FIAs and Interest Rates

The insurance company usually sets the interest rate of the annuity. Our company only works with trusted and reliable insurance providers. Generally, you should look for a reasonable rate of return. While you may not always receive a high return with this low-risk purchase, you won’t lose money, either. You can maintain a reasonable return over time while still keeping your assets secure.

Considering Your Annuity Options

Consider all your options when choosing annuities for retirement. You can make the choice that most suits your needs, with the help of our professionals. Our team is here to help.

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