HOLDS MANY BENEFITS
Guaranteed* Income: Annuity Benefits
Retirees may find that annuities hold many benefits. One key benefit: a guaranteed* income for life. How does this work? One way is by using a fixed index annuity (FIA). An FIA is a contract with an insurance company. You put money in, allow it time to grow, and the insurance company agrees to make payments at specific intervals. Typically, retirees begin receiving money at age 60 or later. Alternatively, you could wait longer to receive payments. In that case, the income you receive might be larger. The money you’ve put it to and FIA is protected from loss because it isn’t tied to the market.
Guaranteed* Income Annuity
With an FIA, you can arrange ongoing income payments for yourself. The payment is typically a fixed withdrawal amount. However, you may also have the option of using an income rider so your payments increase with inflation or other costs. In other words, your guaranteed* income annuity may be set up to have a pay raise for you. This is one way to help retirees manage increases in living expenses, medical costs, or other items.
Certainly, there are some limitations with income riders. So, be sure to understand and learn about the potential upside as well as the potential downside of these riders. Lisa Brumfield and her team are here to help you discover how this may impact your unique financial situation. We can answer your questions and help you understand if a guaranteed* income annuity may be for you.
Of course, withdrawing money from an annuity may be taxable. As an example, before age 59 1/2 if you pull money out of qualified retirement accounts, you may face large taxation. However, by working with a professional who understands this aspect of retirement, you can learn how to best handle it.
When You Need It, Your Money Is There
Lots of options and flexibility exist with FIAs, so they are a common product retirees consider. If the stock market does crash, you don’t carry the risk. Instead, the insurance company does. FIAs allow you to secure your future retirement because of their protection benefits. Also, after you pass on, your death benefit can go to your loved ones without having to go to probate court.
Typically, an FIA accumulation phase is 5 years or greater. By following the terms of your FIA agreement, you avoid surrender charges. During this period, your interest credit on the annuity contract is safe, too. You may also choose to make this growth phase longer in order to possibly increase your earnings. Call us for an appointment or attend one of our educational events to learn more.
Having a guaranteed income annuity can happen with an FIA. But, in the accumulation stage, money should be kept in the account. After this phase is done, however, you may take money out of your FIA without additional fees. Be sure to contact us to learn about specific rules for your FIA. Or, call us to see if an FIA may be right for you.
Usually, you can choose whether you take your income payments monthly or each year. There are tax impacts to consider with each choice, of course. Also, you may simply keep your money in an FIA instead of taking income payments. This allows for additional growth. At our events, we can review these topics and more. Although we can meet with you to discuss retirement planning be sure to contact a tax advisor for tax questions.
You may be able to leave your annuity value to your spouse or another designee after you pass away. Some annuities provide a death benefit as well. You may be able to take advantage of this, even if you have taken income payments during your lifetime. For example, some retirees plan to leave income for their spouse from an FIA after they pass on. Others choose lump sum payment options. Whatever you choose, we’re here to help guide you.
*Backed by the claims-paying ability of the carrier.