An annuity is a long-term, tax-deferred* insurance contract or investment designed for retirement. It allows you to create a fixed or variable stream of income during your retirement through a process called annuitization. With an annuity, look forward to your future knowing that you can put aside and protect your retirement savings, and earn interest on it until you need it. An annuity enables you to convert your savings, such as a 401(k), into a steady stream of income over the long term. Typically used for retirement income, the annuity can also be useful tool for those who have come into a lot of money and need a way to manage it and make it last. An annuity is sometimes referred to a “self-made pension.”
A fixed annuity is an insurance contract that guarantees retirement income payments. With a fixed annuity contract, you make one or several payments to an insurance company, which in turn promises to provide you with a fixed stream of income during your retirement through a process called annuitization, regardless as to how the markets are performing.
Indexed Annuities allow money to be invested in a stock market index, i.e. Standard & Poor’s 500. Payments are based on the performance.
Benefits of a Fixed Annuity
Fixed annuities can provide protected lifetime income and security to your overall retirement plan, including:
- Tax-deferred growth
- Guaranteed interest earnings
- Access to your money
- Protection from market ups and downs
- Guaranteed beneficiary benefit that avoids probate