Annuities: Understand the Benefits
Learn About the Benefits of a Guaranteed* Income Annuity
People often ask, “Are fixed indexed annuities a good option?” And while the answer is clear once you learn a few important points, it’s important to remember that everyone’s situation is different. It’s important to take the time you need in figuring out if a product is right for you. You want to make sure that an annuity can help provide you with enough money to live off of during retirement. Also, you should take a look at your goals for retirement. It’s important to understand the benefits of an annuity, in order to make an informed decision about how an annuity might align with your goals.
Key Benefits of a Fixed Indexed Annuity
You can make an informed decision about fixed indexed annuities, and whether they are right for you by understanding their benefits. They offer index interest potential, tax deferrals, and other potential benefits to help protect you. Your retirement income could be in a safer place with a fixed indexed annuity because of these benefits.
A fixed indexed annuity may present a chance for potential interest growth, based on changes in indexes. Because of potential indexed interest, fixed indexed annuities provide a custom potential for growth. This is because the interest your contract occurs is tax-deferred, therefore there’s a chance it could earn assets quicker.
Because of current federal tax laws, any interest accrued on your fixed indexed annuity contract is tax-deferred. This means you won’t have to pay ordinary income taxes on any taxable portions until you start to collect payments from your contract. Payments are taxed as ordinary income, so if payments are taken before a retiree is 59 1/2, a 10% additional federal tax or surrender charge may apply.
Protection Benefits of a Fixed Indexed Annuity
The protection offered by a fixed indexed annuity can benefit you in three separate ways:
Keep your principal and credited interest protected with a fixed indexed annuity.
One of the benefits of an annuity such as a fixed indexed annuity is how it doesn’t just provide you with income. If you pass away before you start collecting payments, a fixed indexed annuity can help you provide for your loved ones. In some cases, even if you’ve already started to receive payments, your beneficiaries still receive a benefit.
A guaranteed* lifetime annuity income can help counteract the risk of outliving your retirement savings. Retirement has changed in America: Many retirees are living well into their 90’s. Many are concerned about living past their savings. A fixed indexed annuity can generate a reliable stream of income that can’t be outlived. With a fixed indexed annuity, you can also choose how you want to receive payments, for instance, a guaranteed* annual income for the rest of your life.
Are Fixed Indexed Annuities Good
in Terms of Interest Rate?
A Fixed Indexed Annuity’s interest rate depends on a few variables. Insurance companies offer a variety of different insurance products, all with their different advantages and choices. Depending on the company, product, and options that you pick, your interest rate may vary. Here at Safe Harbor, we work with dedicated, focused insurance companies with good reputations. In general, you should look for a reasonable rate of return**. But it’s best to keep in mind that the insurance company is guaranteeing* your earnings rate. In many cases, they’re also providing income for life. Now, you might not see a high ROI because of this, but it’s a low-risk option. That means you don’t have to worry about losing money. You get to keep your hard-earned money safe, while still maintaining a reasonable rate of return.**
Is a Fixed Indexed Annuity
a good option for me?
A Fixed Indexed Annuity is a contract with an insurance company. First, you agree to place funds into the annuity, then the insurance company consents to pay you a fixed interest rate. They pay you this amount over a certain period of time, for instance, 10 years. The first phase is accumulation, during which your money grows. Then, once the waiting period ends, the payout phase begins, and at this point, you can start receiving payments whilst still keeping your money safe.
Fixed Indexed Annuities and
the Stock Market
So, are fixed indexed annuities a good choice for consideration? Well, it’s important to remember that fixed indexed annuities don’t use the stock market to produce earnings. Instead, they use what’s called an “index.” The insurance company guarantees a minimum interest rate. This means if the stock market drops, it’s the insurance company that’s at risk, rather than you. The interest rate will remain steady regardless of what’s happening in the stock market with a fixed indexed annuity.
*Backed by the claims-paying ability of the carrier.
Learn More About Your Annuity Options
When thinking about your annuity choices, your should review all possible options. You can decide if fixed indexed annuities are right for you with the help of our experts. Just give our team at Safe harbor a call, and we can help answer any questions you may have. Learn about your options at one of our educational seminars.