Annuities

Discover how annuities can provide dependable income and peace of mind for your retirement.

Annuities are financial products designed to provide a steady income stream, often used as part of retirement planning. They are typically offered by insurance companies and can help ensure a predictable income over a specified period or for life.



Annuities can be tailored to suit different needs—whether you're looking for immediate income or want to accumulate funds over time. Choosing the right annuity depends on your financial goals, risk tolerance, and income needs. It’s important to work with a trusted financial advisor to select the best option for your future.

Types of Annuities

As with most financial products, there are several types of annuities available:

Fixed Annuities: These provide regular, guaranteed payments. The interest rate is fixed and does not fluctuate, offering predictability and security—ideal for conservative investors.

Variable Annuities: Payments vary based on the performance of selected investment options. While they offer growth potential, they also come with higher risk due to market volatility.

Indexed Annuities: These annuities earn returns based on the performance of a stock market index (e.g., the S&P 500), combining elements of both fixed and variable annuities.

Immediate Annuities: Purchased with a lump sum, these begin paying out almost immediately, typically within a year. They are suited for retirees who need income right away.



Deferred Annuities: These delay payments until a future date, allowing your investment to grow on a tax-deferred basis. Ideal for those planning ahead for retirement income.

What to Consider When Choosing an Annuity

Before selecting an annuity, take the following into account:

Income Needs: Consider how much supplemental income you'll need during retirement, and for how long.

Payout Options: Choose between fixed period, lifetime income, or joint payouts for you and a spouse.

Fees & Expenses: Variable and indexed annuities may have higher fees. Be sure to understand all associated costs.

Liquidity: Many annuities have surrender charges if funds are withdrawn early. Make sure you won’t need access to these funds in the near term.

Tax Implications: Earnings grow tax-deferred, but withdrawals are taxed as ordinary income. Early withdrawals may incur penalties.



Inflation Protection: Some annuities offer riders or adjustments that help payments keep pace with inflation.

When to Enroll in an Annuity

Timing your annuity purchase depends on your retirement strategy and financial situation. Common enrollment scenarios include:

Retirement Transition: Many people purchase annuities as they near retirement to create a stable income stream that complements Social Security and other retirement savings.

Lump-Sum Windfalls: If you receive a large sum, like an inheritance or severance, you might convert part of it into an annuity to ensure future financial security.

Deferred Income Strategy: Younger individuals may buy deferred annuities early to take advantage of tax-deferred growth for retirement income decades later.

Risk Management: For those concerned about outliving their savings, annuities can provide peace of mind with lifetime income options.