National Annuity Awareness Month

June is National Annuity Awareness Month and in order to bring you more insight on annuities and how they work we will break down the different types of annuity options available to you. Annuities are essentially an agreement between you and an insurance company intended to provide income that is promised for the rest of your life. You make a payments to your chosen insurer and, in exchange, they promise to increase that money and provide you with payments during retirement. They are created to help you increase your retirement income. In essence, annuities are a long-term insurance policy. In retirement you get benefits in the form of monthly checks. Annuities are intended to help you raise insurance funds or convert your retirement savings into a steady stream of income.

There are four major types of annuities and they are: variable annuities, fixed annuities, immediate annuities, and Fixed indexed annuities.

• Variable annuities offer a wide variety of investment options that offer varying degrees of risk and growth opportunities.

• Immediate annuities provides payments that begin immediately or within one year of purchase.

• A fixed indexed annuity is a long-term savings option that provides primary protection in the market and growth opportunities. They allow you more potential for growth than a fixed annuity, with much less risk and less possible return than a variable annuity.

• Fixed annuities would allow you to prepare for retirement and grant you access to your capital by the age of 591⁄2. In addition to ordinary income tax, you may still be subject to a 10% early withdrawal of the federal tax penalty. However, you won’t have to start paying taxes on these forms of annuities before you start earning financial payments from them. Fixed annuities help shield your money from market ups and downs at guaranteed rates.

As with any investment strategy, annuities have their advantages and disadvantages. Many annuities are muddled down by a bunch of fees that can reduce the return on your investment and leave your money wrapped up. If you try to take any money away before certain ages, it’s going to cost you.

Various annuities may be subject to financing costs or management fees by the insurance company. It is important to asking your insurer if the annuities you are interested in are subject to any extra costs. You don’t want to be disappointed by any additional or hidden fees when you consider these solutions.

Speak with someone on our team to discuss if an annuity option is appropriate for you.  We can help you understand annuities more in depth including discovering your risk tolerance, annuity payout options, their tax implications and more.

Fixed and variable annuities are suitable for long-term investing, such a retirement investing.  Gains from tax-deferred investments are taxable as ordinary income upon withdrawal.  Guarantees are based on the claims paying ability of the issuing company.  Withdrawals made prior to age 59 ½ are subject to a 10% IRS penalty tax and surrender charges may apply.  Variable annuities are subject to market risk and may lose value.

Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.