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Annuities

A strategy designed to protect your portfolio from market losses and generate guaranteed income for life

When you’re thinking about using annuities for income, keep in mind how to best integrate them with your other resources. A great strategy is to determine how much money you’ll need in retirement, purchase one of these products to be sure you have enough, and leave the rest of your money invested to grow. If the market cooperates, your net worth will continue to increase while you’re retired. And if it doesn’t, you’ll know your annuity, combined with Social Security, will continue to provide steady and reliable income.

What Is an Annuity?

An annuity is an insurance-based product that is a powerful retirement planning tool. Typically, you fund an annuity with a lump sum and promise not to touch that sum for a set amount of time. In return for this, the insurance company provides you with a guaranteed interest rate and a lifetime of income. Let’s list the six main reasons why you should consider buying an annuity.

1. Safety Features

One of the greatest fears that retirees have is losing their hard-earned money. Annuities have safety features that help to keep this from happening. For example, a fixed annuity will have a contractual guarantee. This guarantee promises that you will earn a set rate each year, no matter what. Additionally, your principal will be safe (this does not apply to variable annuities). This is very helpful when you are at a time in your life when you can no longer afford to gamble on market ups and downs.

2. Growth Potential

Fixed annuities will provide you with guaranteed growth, even in a bear market. The rate you receive is much better than what you would get from a CD or a savings account. A fixed annuity is simultaneously able to provide growth and hedge against loss.

3. Tax Advantages

The tax advantages of an annuity are twofold. First, both qualified and non- qualified money can grow in an annuity tax-deferred. Second, when you withdraw this money during retirement, you are typically in a lower tax bracket. This allows you to lessen your total tax burden.

4. Lifetime Income

Most annuities provide annuitization options that will guarantee you income for the rest of your life. They can serve to be a consistent and reliable source of income. Many find it to be a helpful supplement to Social Security Benefits.

5. Access to Funds

While you may not have unrestricted access to all funds in the annuity, you will not be completely cut off from access. Many annuities allow you to access a small percentage of funds each year during the accumulation period, without penalty. This will differ from policy to policy. If this is an important feature to you, be sure to talk it over with your advisor.

6. Customizable

There are many different types of annuities. These include fixed, variable, immediate, and deferred. Each type serves a different purpose. You also have many choices regarding things like payouts and survivor benefits. You can also add a rider on to your annuity for such purposes as protecting against inflation and providing long-term care coverage. As you can see, the options are numerous. This allows you to build a policy that will work for your specific needs.

Buying Your Annuity

An annuity is a very versatile and helpful retirement planning tool. But buying one can be very confusing and overwhelming. Your advisor or qualified insurance agent can help you navigate all the choices to find the annuity that is right for you. Questions? Want to schedule an appointment? Contact us.



Annuities are long-term investments designed for retirement purposes. Withdrawals of taxable amounts are subject to income tax and, if taken prior to age 59½, a 10% federal tax penalty may apply. Early withdrawals may be subject to withdrawal charges. Optional riders have limitations and are available for an additional cost through the purchase of a variable annuity contract. Guarantees are based on the claims paying ability of the issuing company.