An annuity can help you accumulate tax-deferred earnings as part of your overall
retirement plan. Annuities offer the opportunity for lifetime payments and
tax-deferred earnings, and provide a guaranteed death benefit for your
beneficiaries. All guarantees are backed by the continued claims-paying
ability of the issuing insurance company.
Why own an annuity?
You may want to consider investing in an annuity as part of your long-term
financial plan if:
-
You're in a higher tax bracket, and want to defer additional income.
- You've
reached your deductible limit on all your retirement accounts and wish to save
more for retirement.
What is an annuity?
An annuity is different from most other retirement savings vehicles — it's
actually a contract between you and an insurance company. In return for making
one or more premium payments, the insurance company agrees to provide you an
income stream — usually during retirement. You can elect to receive payment all
at once or as a series of payments, even for the rest of your life.
Variable or fixed annuity?
An annuity is a contract between you and an insurance company, under
which you make purchase payments to the insurance company during the
“accumulation period” and the insurance company agrees to make periodic income
payments to you, either beginning immediately or at some future date, during
the “income period” (also known as “annuitization”). You may select the date on
which income payments are to begin (the “annuity date”).
Annuities are designed for long-term investing to help meet retirement and
other long-range goals. Annuities are not suitable for short-term goals because
substantial tax penalties and early surrender charges may apply if you withdraw
your money early. In addition, withdrawals prior to age 59½ may be subject to a
10% IRS penalty.
A variable annuity allows you to choose from a variety of subaccounts that
invest in stocks, bonds, and money market instruments. Your earnings and
payments will fluctuate depending on the performance of the subaccounts you
select, and may be more or less than the original amount invested.
With a
fixed annuity,
you receive a fixed rate or return on your premium payment.
All guarantees are backed by the continued claims-paying ability of the
issuing insurance company.
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