Annuities
What Is An Annuity?
You Might Be Asking Yourself
What is an Annuity?
When it comes to retirement income, an annuity could be a good alternative for a retiree. Annuities can present retirees with the option of fixed regular payments. So how does utilizing annuities for retirement work? Well, first, let’s discuss just what an annuity is.
What an Annuity Is and Isn’t
There are a few different types of annuities. These include fixed annuities, fixed indexed annuities, (also known as FIAs), and variable annuities. A fixed annuity can protect your money, but the interest rate is fixed. The rate is usually lower than the rate you could receive from an FIA or a variable annuity. A variable annuity, though, comes with more risk. This is because its rate is determined by the stock market. As such, your principal balance is at risk in a variable annuity.
Alternatively, FIAs aren’t invested in the stock market. Instead, an FIA is a contract with an insurance company, that could potentially generate interest through an index. An extra benefit of an FIA in retirement is how your retirement savings are protected by the insurance company that issues the annuity. This keeps your hard-earned money safe. FIAs also allow for a reasonable rate of return.** An FIA could be the right choice for certain retirees because of these factors.
So exactly what is an annuity income?
Annuity income is a way to pay for your lifestyle in retirement. If you choose an FIA, this income could last you the rest of your life.
Myths Surrounding Annuities
You may have heard some odd things about annuities. For instance, you might’ve heard some professionals say they’re bad products. But why do they say this? For one thing, it’s important to remember that annuities aren’t all the same. Some annuities, such as variable annuities, are just as risky as the stock market. With a variable annuity, you could lose principal when the stock market drops.
When considering annuity strategies, it’s important to consider your risk tolerance. A higher rate of return might mean more risk. Some types of annuities, like FIAs, can provide protection of principal, as well as a reasonable rate of return.**
Annuities: Then Vs Now
Retirees didn’t always have a lot of annuity options available. Previously, some provided safety of principal but had a low rate of return, while others offered better interest rates but came with a lot more risk. Neither of these options was really beneficial to retirees.
Within the last few years, though, things have changed in the annuity industry. Retirees can now make choices to best fit their own unique needs. Now an annuity can offer a reasonable rate of return** and protection of principal. You could purchase an annuity that can offer a lifetime income stream. And you can choose from various extra annuity benefits, such as income riders and different beneficiary options.
Reach Out to Us to Get Educated About Annuities
Schedule a one-on-one, no-obligation meeting with an annuity contract professional today to talk about your specific retirement needs. During these meetings, we can discuss factors such as:
- What stage of retirement you’re currently in
- What assets you currently have
- Annuity income vs potential expenses
- Your current risk assessment
Once we’ve gotten to know your financial situation and retirement goals, we can help you decide which insurance products or services fit your retirement strategy. Call us today if you’re interested in hearing more about how an annuity might be the right retirement strategy for you.
Stock Market Vs. Safe Money
Red Line Vs. Green Line
Not everyone minds the ups and downs of the stock market (the red line) as they can ride the emotional waves of seeing their retirement account sometimes sink. But most retirees prefer to keep their principal protected (that’s the green line.) They want to be sure they won’t run out of money, no matter what happens in the market.
Our team can provide “safe money” options, using certain types of annuities and indexed life insurance products. We can help retirees feel confident and secure about their future.
