Planning for Income in Retirement
Annuities are designed to provide income in retirement, and can play a role in a long-term financial plan.
Understanding Annuities
Annuities are insurance contracts designed to provide income, either beginning immediately or at a future date. They’re often used by investors seeking a source of cash flow in retirement.
Annuity types vary widely. Fixed annuities offer a rate of interest set by the insurance company, while variable annuities allow you to allocate funds to market-based investment options, where values fluctuate with performance. We can help you evaluate whether an annuity — and which type — may fit your circumstances.
Fixed Annuities
With a fixed annuity, you pay a premium to an insurance company and, in return, receive payments at a rate set by the contract — for a specific period or for life, depending on the payout option you select. Payment guarantees are based on the claims-paying ability of the issuing insurance company. Fixed annuities are often considered by investors seeking income that doesn’t fluctuate with the market.
Variable Annuities
With a variable annuity, you allocate your premium among a range of sub-accounts, similar to mutual funds. Account values fluctuate with the performance of the underlying investments, and you may lose money, including principal. Many variable annuities also offer optional features, such as death benefits and living benefit riders, which are available at additional cost and subject to the terms of the contract.
Annuity Features
Income Options
Annuities can provide an income stream for a set period or for life, depending on the contract. Guarantees are based on the claims-paying ability of the issuing insurer.
Tax Deferral
Earnings grow tax-deferred; you pay ordinary income tax when you take withdrawals.
Market-Based Growth Potential
Variable annuity sub-accounts offer growth potential, with values that fluctuate and may lose money.
Inflation-Adjustment Options
Some annuities offer riders designed to adjust income for inflation, available at additional cost.
Ready to Explore Annuities?
Ready to Explore Annuities? — Schedule a conversation to discuss your retirement goals. We can help you understand the different types of annuities and evaluate which options may fit your needs.