Fixed Annuities

Overview – Fixed annuities are designed for individuals who desire safety and predictability, they provide a guaranteed return on your investment that is backed by the insurance carrier.  Interest earned on a fixed annuity is tax deferred and can be converted into a retirement income that can last for a defined period of time or for a lifetime.  Fixed annuities are ideal for conservative investors who take a long-term view towards retirement, have sufficient liquid assets to cover emergencies, and who desire an income that they cannot outlive.

Features – Fixed annuities have many features designed to meet the needs of investors, a few features to choose from include the following:
• Guaranteed Rates – The annuity contract locks in a fixed income rate for a specified number of years.
• Inflation Hedges – Some annuity contracts provide CPI adjustments, allowing your income to grow with inflation.
• Spousal Benefits – Annuities can be set up to provide income for your lifetime and your spouse’s lifetime.
• Simple to Manage – no more worrying about picking investment managers simply pay the premium and receive income for life.
• Life Insurance – Optional life insurance can provide a death benefit to loved ones upon your passing.
• Double Guarantee – Funds guaranteed by the insurance company as well as State Insurance funds up to a limit.
• Variable Terms – Fixed annuity contracts can be purchased for shorter terms to provide additional income over certain periods.
• Immediate – An immediate annuity provides checks immediately after your investment.  Checks can be paid monthly, quarterly, or semi-annually.  With the decline in pension plans and concerns over social security, more retirees are turning to immediate annuities provide retirement income for life.
• Deferred – Deferred annuities operate like a tax deferred, high interest, savings account.  During the accumulation phase premium payments are made into the annuity and the tax-deferred interest is allowed to compound and build value prior to retirement.
• Life Annuities – A life annuity is an annuity designed to last and pay income for the lifetime of the beneficiary.  According to Social Security Administration data the average 65 year old American male is expected to live until 83, but there is a 50% chance of living past 83 and a 25% chance of living past age 90.  Understanding this statistic makes a life annuity an important retirement planning tool as it can guarantee that your income will not stop should you run out of savings.
• Period Certain – Level payments are received for a pre-defined number of years.  Should you die before the end of this period then payments will be made to the designated beneficiary.  No payments are made to the annuitant after the end of the specified period.  This type of annuity does not provide income for life.
• Selecting a Fixed Annuity – Fixed annuities provide many advantages to the buyer, but each advantage can be more or less valuable to the buyer based upon their unique individual circumstances.  Picking the highest rate does not ensure that you have selected the right fixed annuity for you.  Our professional advisors can walk you through the process of picking the right annuity by quickly discussing your goals and objectives and matching you up with the fixed annuity best suited to your needs.
• Advantages:
  • Tax Deferral – A significant benefit of a fixed annuity is tax deferral.  You pay zero taxes on annuity interest until it is taken out of the annuity in the form of income.  Even though you will eventually pay taxes on the interest, the tax deferral allows you to compound the interest, essentially earning additional income on money that would already have been paid to the IRS in an ordinary investment like a CD or taxable bond.
  • Higher interest – Fixed annuities are able to offer higher interest than other similar guaranteed investments due to the ability of the insurance company to pool your money with other investors and manage the money as they see fit.
  • Partial Liquidity – Fixed rate annuities allow for partial withdrawal without forfeiting interest or liquidating the entire account.
  • Retirement Tools – Fixed annuities provide retirement friendly features, options, and riders.  A deferred fixed annuity can be transformed into a lifetime annuity providing income for the rest of your life.  Death benefit riders can help provide cash to beneficiaries and protect the value of your estate.

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