Build a More Predictable Retirement Income Strategy
Annuities are long-term insurance products that may be used for retirement accumulation, income planning, principal protection features, and long-term financial strategies. We help clients understand how annuities may fit within a broader retirement plan.
Types of Annuities and Their Potential Uses
Different annuity products serve different purposes. Understanding how each works can help you evaluate whether an annuity may be appropriate for your retirement strategy.
Fixed Annuities
Fixed annuities offer a guaranteed interest rate for a specified period, providing predictable growth and principal protection features. The issuing insurer guarantees the interest rate and return of premium subject to policy terms.
Fixed Indexed Annuities
Fixed indexed annuities credit interest based partly on the performance of a market index, subject to caps, participation rates, floors, and other policy terms. They are not direct investments in the stock market or any index.
Immediate Annuities
Immediate annuities begin paying income shortly after purchase, providing a stream of payments that can begin almost immediately. They are often used by people who need income right away.
Deferred Annuities
Deferred annuities allow for accumulation over time before income payments begin. They may be appropriate for individuals who want to save for future income needs, such as retirement.
Income Riders
Some annuities offer optional income riders that can provide a guaranteed lifetime income stream, subject to rider terms and additional costs. These riders may help address the risk of outliving retirement savings.
Accumulation
Annuities can serve as a tax-deferred accumulation vehicle, allowing earnings to grow without being subject to current income tax until withdrawn. This can be beneficial for long-term retirement savings.
Retirement Income
Annuities may be used to create a predictable stream of retirement income, helping to address the risk of outliving savings. Income amounts depend on factors including age, premium amount, product type, and withdrawal timing.
Legacy Considerations
Some annuities include death benefit features that may pass remaining value to beneficiaries. The specifics depend on the product, policy terms, and whether the contract is in payout or accumulation phase.
What to Know About Annuities
Annuities are long-term insurance products designed for retirement and long-term financial planning.
Surrender charges may apply if you withdraw more than the allowed free withdrawal amount during the surrender period.
Withdrawals may be taxable as ordinary income to the extent they exceed your cost basis.
Withdrawals made before age 59½ may be subject to a 10% federal tax penalty, depending on the circumstances.
Guarantees, including those for fixed annuities and income riders, depend on the claims-paying ability of the issuing insurer.
Annuity product availability, features, and terms vary by state and carrier.
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Learn MoreDisclosure: Annuities are long-term insurance products. Surrender charges may apply. Withdrawals may be taxable as ordinary income, and withdrawals before age 59½ may be subject to a 10% federal tax penalty. Guarantees depend on the claims-paying ability of the issuing insurer. Annuity product availability, features, terms, and rates vary by state and carrier. This information is for general informational purposes only and does not constitute a recommendation or guarantee of any particular outcome. Trust Life and Annuity LLC does not provide tax or legal advice. Individuals should consult qualified tax and legal professionals regarding their circumstances.
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