Make your retirement savings work for your next chapter.
Retirement isn't just about how much you've saved. It's also about how you protect those savings and turn them into income when the paychecks stop. Annuities are one option worth understanding.
Growth. Protection. Income.
Retirement planning often comes down to balancing these three goals. The right balance depends on your age, other savings, income needs and comfort with risk.
Help your savings grow
Some annuities offer a declared interest rate or interest credits linked to a market index. With fixed indexed annuities, credited interest is subject to participation rates, caps, spreads and other contract rules; the contract does not invest directly in the index.
Protect what you've saved
Fixed annuities may provide contract-based principal protection from direct market losses when held under the terms of the contract. Withdrawals, charges, and insurer financial strength still matter.
Plan for dependable income
Some annuities can provide a stream of payments for a specified period or for life, depending on the payout choice and contract. This can help supplement Social Security and other retirement income.
Common types of retirement annuities
Different contracts solve different problems. Here are four general categories to discuss.
Fixed Annuities
Typically credit interest at a rate set by the insurance company for a stated period. Review renewal rates, withdrawal terms and guarantees.
Fixed Indexed Annuities
Credit interest according to an index-based formula, with limits and contract conditions. They are not the same as investing directly in stocks.
Immediate Income Annuities
Convert a lump sum into payments that generally begin soon after purchase. Payout options may include life-only, joint-life or guaranteed-period choices.
Deferred Income Annuities
Allow income payments to begin at a future date. These may appeal to people planning for later-life income needs.
Questions worth asking before buying an annuity
When will I need my money?
Many annuities have surrender periods and withdrawal charges. Taking more than the free-withdrawal allowance can reduce what you receive.
What does the guarantee cover?
Guarantees depend on the issuing insurer's claims-paying ability, not FDIC insurance. Ask how rates, benefits and income guarantees are calculated.
What are the costs and tax rules?
Some contracts have rider fees, spreads or other charges. Withdrawals of taxable gains may be taxed as ordinary income, and withdrawals before age 59½ may incur an additional federal tax penalty.
Could an annuity fit into your retirement picture?
An annuity may make sense for some people who want predictable income or a defined approach to preserving part of their savings. For others, flexibility, liquidity or different investments may be more important. We can help you start with your goals rather than a product.
Educational information only; not individualized investment, legal or tax advice. Annuity sales may involve agent commissions. Review the specific insurer's disclosures and suitability information before purchasing.