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Annuities

If you’ve ever worried about outliving your savings, you’re not alone. A recent study found that 67 percent of Americans indicated they would be willing to give up smaller pay increases in exchange for steady and reliable income in retirement. In the same study, 78 percent said the disappearance of pensions has made it harder to achieve the American dream.1 

With pension offerings on the decline, you may want to consider a fixed income component to your financial strategy. In short, adding an annuity may be an opportunity to help ensure a portion of your income will be guaranteed for life.

What is an annuity? 

An annuity is a contract between a policyholder and an insurance company. In a fixed annuity, the insurance company guarantees a contract owner’s principal from stock market losses and pays interest based on the terms of the contract. When a policyholder is ready to receive income distributions, annuities offer a variety of payout options, which may include a lump sum, free withdrawals and income for life.

Most annuities have provisions that allow contract holders to withdraw a percentage of the value of the contract each year up to a certain limit (called a free withdrawal amount, which is typically 10 percent per year). Most deferred annuities are liquid, but withdrawals above the annual free withdrawal amount will typically incur a “surrender fee” during the initial term of the contract (typically the first five to 15 years).2

Things to consider when looking at an annuity:

  • Which annuity is right for me?
  • Do I need income now or in the future?
  • What is the financial rating of the insurance company offering the annuity?
  • What’s my purpose for considering an annuity — retirement income, tax deferral, principal protection, growth, pass to beneficiaries?

1 The National Institute on Retirement Security. “Retirement Security 2015: Roadmap for Policy Makers – Americans’ Views of the Retirement Crisis.” March 2015.

2 Annuity withdrawals made before age 59 ½ may be subject to a 10 percent penalty fee, and all withdrawals may be subject to income taxes.

We are an independent financial services firm helping individuals create growth and income strategies using a variety of insurance solutions to custom suit their needs and objectives.

Investing involves risk, including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. None of the information contained on this website shall constitute an offer to sell or solicit any offer to buy a security or any insurance product.

*Any references to protection benefits or steady and reliable income streams on this website refer only to fixed insurance products. They do not refer, in any way, to securities or investment advisory products. Annuity guarantees are backed by the financial strength and claims-paying ability of the issuing insurance company. Annuities are insurance products that may be subject to fees, surrender charges and holding periods, which vary by insurance company. Annuities are not FDIC insured.

The information and opinions contained in any of the material requested from this website are provided by third parties and have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed. They are given for informational purposes only and are not a solicitation to buy or sell any of the products mentioned. The information is not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet the particular needs of an individual's situation.