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UNDERSTANDING ANNUITIES
If you have a 401k, IRA, or Roth IRA, you probably feel as if you’re doing everything you can to be financially prepared for retirement, and, perhaps you are. However, at some point along the journey, you might be better off by incorporating a "Properly Designed" annuity into your retirement plan. In fact (And, We Are Serious Here)... Everyone should have one!
An annuity is a program offered by an insurance carrier that can provide you with a number of different financial strategies that can assist with your retirement planning.
This includes;
1. The opportunity to receive higher growth potential similar to a program that invests your money in the market, but this time, without risking any of your money.
2. An annuity can be used to create a steady income stream much like a pension plan, that you cannot outlive. In some cases, we can even show you how to create an Increasing income for life.
3. Some annuities come with unique features & benefits that others might not, which can have an impact on determining which one is best for you.
The key is how you use it to help you and your family, and should only be designed by a Trusted Financial Professional! That's where we come in!
Types of Annuities
There are a number of different types of Annuities that are available for you today, and, there are far more choices than there used to be. As a result, there is a lot of misinformation about annuities, much of which may be perpetrated by "pitchmen" to help them sell you on what might very well be, inappropriate options.
Unfortunately, most of what you'll probably hear may not be accurate. And, while many annuities offer similar benefits such as income tax-deferred earnings, there is a myriad of different methods or indices you can use to take advantage of the market, or simply what an annuity can achieve for your circumstances.
Below are the Generic Characteristics of most annuities currently available on the market. However, at Financial 411 we always use the plan(s) that fit into your specific goals and needs to make sure you receive the results you deserve.
Immediate Annuities - Allow you to create a stream of payments for the period you choose from as little as 5 yrs or for the rest of your life. For example, if you received money from an inheritance, the sale of property, life insurance proceeds, etc., you can use that money to set up an annuity that can provide you with that Immediate stream of monthly payments. Both deferred and immediate annuities come in several varieties:
Deferred Annuities - Allow you to save money for retirement (and other reasons), although, an annuity will not be right for every specific objective. Deferred annuities... defer income taxes on earnings (until you withdraw them) and it also defers the time frame from which you may want to begin taking an income. As a result, this allows your funds to grow in a tax-favored manner and may create a significant advantage both during the accumulation and distribution phases of your retirement.
Fixed Annuities - Savings Plans basically guaranteed minimum interest rate programs, where the rate of interest is set by the carrier prior to your deposit and offered for a specific period of time only. They are the lowest financial risk and with the most conservative returns. Growth here is also tax-deferred until withdrawn.
Fixed-Indexed Annuities - Known by their acronym FIA... have the BEST possibility to earn a higher interest rate based on the performance of a market index. However, there generally isn't a guaranteed minimum return (Optional INCOME riders may be used to provide a minimum guarantee, but they can come at a cost. Determining if that works for you or not can only be completed after a review by a trusted professional. Generally, FIA's offered reasonable to moderate returns, until recently where we have now begun to see returns on the better programs in double digits annually. In the end, FIA's are a much safer, but competitive alternative and are the only programs where you can generate growth even in a down market. (You gotta see this).
Variable Annuities - (VA) Offer choices between sub-accounts (similar to mutual funds), to offer higher earnings potential, but there isn’t a guaranteed return. Variable annuities are often laden with hidden fees & expenses, and as a result, often have the greatest risk attached to them, because there’s a chance you could lose some or all of your money. As a result, we have chosen to no longer offer V.A. Products.
Note: VA's require a securities licensed representative to discuss and/or assist you to invest into these products.
