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Annuities For Retirement

Planning for retirement can feel overwhelming. But, there are some options you may not even be aware of that could help make your retirement strategy simpler and provide you with more confidence. Using annuities for retirement could potentially allow you to earn a reasonable rate of return,** while also keeping your principal and interest guaranteed* safe. Ensuring you have the income you need to retire, regardless of what happens in the stock market, is our top priority.

What is a Fixed Annuity

A fixed annuity (FA) is a type of annuity product.  A FA provides a reasonable rate of return with the benefit of keeping your money safe. What this means is, your interest will rise, regardless of the performance of the stock market.  Crucially, an FA is not an investment.  When a market crash happens, the money in your annuity will stay protected.*

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mature couple walking together outside

Annuity vs. Retirement Plan Accounts

Annuities differ from traditional retirement account options such as 401(k)s and IRAs. An Annuity may offer a greater level of flexibility compared to traditional retirement plan accounts, such as:

  • Protection in the event of a market drop
  • No contribution limits on your Annuity
  • Your money grows tax-deferred, meaning you won’t pay taxes on it until you take it out
  • You could potentially “roll over” the money from your 401(k) or IRA into an Annuity
couple looking at annuities for retirement options

There are two main phases to an annuity contract: The accumulation phase and the distribution phase. During the accumulation phase, you contribute money to your annuity and leave it there to grow over time. Interest is tax-deferred, and based on the performance of an index or multiple indexes. The way the interest rate is calculated will depend on your individual contract. The distribution phase starts when you begin withdrawing money from your annuity. When you can begin taking payments, and how much you can withdraw at a time, will also be outlined in your contract.

An annuity grows tax-deferred. Unlike retirement plan accounts, which tax your interest, you will only pay taxes on the money in your annuity once you take it out. Additional tax benefits may apply. For example, in this specific scenario: if you’ve received a lump-sum payment from an employer-issued 401(1k), you may be able to transfer that money into an annuity, postponing taxes on it. If that applies to you, you may want to look into purchasing an annuity. But, for matters such as these, it’s important that you consult a qualified tax advisor.

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