Annuities

What is an Annuity Plan?

The goal of an annuity plan is for you to be able to comfortably meet your financial goals post-retirement. It is essentially a pension plan that helps you plan for a regular income for the rest of your life. In short, your money is invested, and you live on the returns generated from the investment. These investments are not designed for a risky “high investment return.”

Conventional annuity contracts provide a predictable, guaranteed stream of future income (e.g., for retirement) until the death(s) of the beneficiaries(s) named in the contract or, until a future termination date – whichever occurs first. These financial instruments have been used to accumulate funds and provide significant and sudden increases in personal income (via future, lump-sum withdrawals), all while legally avoiding the taxes (e.g., income-, capital gains-, estate-) that would otherwise be assessed on them. They are designed to make you comfortable post-retirement. Annuities are separated into two categories: Deferred and Immediate Annuities.

Deferred Annuity

The deferred annuity plan involves a one-time lump investment. You purchase this annuity plan and, after you retire, receive income as a monthly pension. You can choose exactly when you want to begin receiving this pension plan. For example, you can start receiving monthly returns from your investment once you retire or at a specific age.

Immediate Annuity

An immediate annuity plan is recommended to those who have recently retired and are interested in receiving their income immediately. You invest in a lump sum and receive a guaranteed payout for life. Your retirement planning consultant will help you determine which option is right for you.

Variable Annuity

Variable Annuity serves as an investment account that is a contract between you and your insurance company. This contract can grow depending on your insurance features and the times in which your investments are tax-deferred. The value of your Variable Annuity depends heavily upon your investment decisions and can help you reach certain long-term goals, including retirement. A financial expert can help you navigate this insurance and make it work for you.

How Does Variable Annuity Work?

A Variable Annuity is a flexible contract with a variety of investment options. These options depend upon investment funds such as bonds, stocks, and money market instruments. Each Variable Annuity is tailored to the needs of every individual. Because the needs of each individual vary, each Variable Annuity is unique.

There are two main stages to a Variable Annuity: The Accumulation Stage and the Payout. During the first stage, the individual makes purchase payments. This money gets invested into investment options the individual has selected. During the Payout stage, the individual can select either regular interval payments or a stream of income payments. A financial expert will help you determine the selection that is right for your needs.

What is a Tax-Deferred Variable Annuity?

Variable Annuities are tax-deferred, meaning the individual does not pay federal taxes on the investment gains from the Annuity until he or she makes a withdrawal, receives income payments, or pays the death benefit. These rules can be complicated, which is why it’s important to consult with your financial advisor before instating a Variable Annuity.

Get Your Free Annuity Plan Quote

An immediate annuity plan is recommended to those who have recently retired and are interested in receiving their income immediately. You invest in a lump sum and receive a guaranteed payout for life. Your retirement planning consultant will help you determine which option is right for you.