Potential Benefits
What Are the Benefits of an Annuity?
We’re here to help you find out which annuity benefits may apply to you.
Retirees: What Are the Benefits of an Annuity?
Certain types of annuities may have benefits especially suited for retirees and pre-retirees. For example, a fixed index annuity (FIA) offers a guarantee of lifetime income*. Specifically, this is backed by the claims-paying ability of the issuing insurance company. Basically, an FIA is a contract or agreement that your money is kept in for a certain number of years. During this time, you cannot withdraw money from the annuity. However, after a certain time period, the insurance company will be able to send you payments. Indeed, the amount of the income payment may increase if you wait longer to withdraw money. Also, the FIA has the very useful benefit of protecting* your principal.
Your Life, Your Income
What are the benefits of an annuity when it comes to paying the bills? With their fixed payments, FIAs provide one way for retirees to receive a consistent income. Additionally, when costs go up, you may want to have an FIA that allows for an increase in income payments as well. Some options, such as an income rider, may allow for something like this. However, different benefits also affect your overall annuity picture and certain conditions may apply. Therefore, be sure to learn more about your options before making a final decision. No matter your choice, it’s good to know your options for how you might access your income in retirement.
Your withdrawal of your retirement savings may also impact your taxes. For instance, one issue you may face is trying to take money out of your traditional retirement accounts too early. Yet, there may be ways to reduce the impact of this. Some situations may allow you to utilize an FIA and discover the answer to the question, “what are the benefits of an annuity?”
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First, a fixed annuity is an insurance product that may offer a pre-set interest rate.
After a set number of years, your money may begin to receive that interest rate. Regardless of what's going on in the market, a fixed annuity contract may guarantee* a certain rate every year. The upside is that your insurance company commits to giving you this rate. The downside, however, is that you lose the ability to see additional interest even if rates, in general, are up.
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Second, is a variable
annuity.
For many reasons, these types of annuities may not be suitable for some retirees. For example, if your goal is to keep your retirement savings intact, a variable annuity cannot guarantee this. By definition, this type of annuity puts your money at risk in the market: it is variable. Also, variable annuities may not provide a fixed income you can count on.
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Third, are fixed index annuities (FIAs).
FIAs may offer potential benefits such as: Retirement income you cannot outlive, a reasonable rate of return, over time, and guaranteed* protection of principal (backed by the claims-paying ability of the insurance company)
Access and Time
In retirement, being able to access your money may be an important part of your plan. Part of the process of an FIA is a specific period of time during which you leave your money in the annuity. Then, you have a period where you may access a certain percentage of your money each year. This combination affords the insurance company an opportunity to potentially grow your money, while still protecting your principal. Finally, when your end of life arrives, an FIA may also protect your beneficiaries with a death benefit.
Flexibility and Choice
What are the benefits of an annuity in terms of flexibility, and the choices available to you? Specifically, when it comes to fixed index annuities (FIAs), here are some of the primary benefits:
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Range of Time
In retirement, being able to access your money may be an important part of your plan. Part of the process of an FIA is a specific period of time during which you leave your money in the annuity. Then, you have a period where you may access a certain percentage of your money each year. This combination affords the insurance company an opportunity to potentially grow your money, while still protecting your principal. Finally, when your end of life arrives, an FIA may also protect your beneficiaries with a death benefit.
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Total Value
When it comes to the total money accumulation, you may have options with an FIA. For example, some FIA agreements allow for an increase in potential index interest the longer you wait for income payments. Other FIAs offer bonuses on your initial 12-month or 18-month deposits.
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Income Options
There's a lot of flexibility in terms of the income provided by an FIA. You can decide to be paid each year, or monthly. In addition, you can select certain living benefits that may change your income as well. We recommend you get informed so you can make the decisions that are right for your retirement.
So, what are the benefits of annuity? Find out which specific benefits may apply to you by contacting our office to schedule an appointment.
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