Secure Income Annuity
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*Variable Annuities
More Growth, But More Risk
Because annuities involve investing money through an insurance contract which then is invested in a specific market portfolio, the return on investment is different for each and every product. Variable annuities are higher risk products but have the potential to have a greater return on investment. However, the potential higher return on investment also comes with the investor having to assume the higher-performance risk. Unlike fixed annuity contracts, there is absolutely no guaranteed return because the money is invested in a variety of stocks, bonds, and money market accounts.
The major benefits to a variable annuity is the ability to accumulate capital on a tax-deferred basis and also to make sure your annuity investment stays ahead of the rising cost of living. A tax-deferred basis means that you do not pay taxes on the invested money until you withdraw from the annuity. At the time of withdrawal, as long as it’s within the correct time period, the money is taxed as regular income. These benefits allow your money to really work for you and accumulate value over time.
Immediate Annuities
Instant Income Planning
An immediate annuity is an annuity contract that is purchased in a single lump-sum payment. This single lump sum then guarantees immediate distributed payments to the individual who purchased the plan. Ideally, individuals who have concerns about their savings or other retirement plan options running out may want to consider this investment option.
Some immediate annuities can have drawbacks that others do not such as the annuity not paying out to the family or estate if the individual passes, where other forms of annuities will. Therefore, immediate annuities are typically not advised for individuals in poor health.
Many different factors go into the purchasing of immediate annuities and the return on the money you spend. If you have questions about whether an immediate annuity is a viable option for your retirement plan, contact the retirement income planners at Income for Life today in order to find the best fit for you!
Fixed Annuities
Best Guaranteed Interest Rates
Prior to 1952, the only type of annuities available for purchase and inclusion in a retirement plan were fixed annuities. These annuities involve entering into a contract with an insurance company that then will guarantee a return on your invested principal plus a set, fixed interest rate. These investments are considered almost as safe as investing your money in a certificate of deposit (CD).
Like we mentioned under variable annuities, fixed annuities allow you to defer paying taxes on any income that is currently invested and when it is distributed at the set contract dates you only have to pay your regular income tax rates, instead of higher rates that can come with other investments.
Many annuities can have complicated rules and restrictions. For example, you may receive five percent interest for the first year or two, but then only three percent for the years following that. Don’t worry about trying to find the best annuities and having to read all the fine print. At Income for Life, we’ve already dug into the fine print for you!
Fixed Index Annuities
Best Of Both Worlds
A fixed index annuity is a new product in the annuities marketplace. It combines benefits from the market that can help improve your return on investment while still helping to reduce the risk involved in this type of investment. Much like a fixed annuity, fixed index annuities offer a guaranteed principle and set terms in which the principle will be invested during.
The main difference in a fixed index annuity is that the interest returned on the principle is based on stock market indices. This boils down to if the section of the stock market your money is invested in does well, you will see a higher return. If it does poorly, you will not compound any interest for that year.
You can reap the reward with a much lower risk to your principal investment. Find out more when you talk with a specialist at Income for Life today!
