As you near retirement, you may worry about how to protect yourself from outliving your savings. Annuities are built for the long-term. They help by locking in guaranteed income streams. They can potentially grow you next egg and also provide death benefits for loved ones. Some people decided to transfer a portion of their accumulated 401(k) account money to an annuity. Annuities are built with guaranteed fixed interest rates or can provide market-based performance. Annuities offer many options to protect your money from losing value and maintain the lifestyle you have worked for.
An annuity is an investment that provides safe, tax-deferred growth of your retirement nest egg. Annuities are considered low-risk, and can provide guaranteed, monthly income when you retire. There are many types of annuities with varying features & benefits. These include fixed, variable, immediate, deferred & hybrid. We strongly suggest you consult with a financial professional to help you understand the various types of annuities before you purchase.
Choosing the right annuity is about finding your optimal balance of growth and security. Factors to consider when searching for an annuity are:
Stability and lower risk.
There are people who prefer a fixed interest rate and do not want to take risks with their retirement funds. These are annuities that provide guarantees to your principal so you cannot lose your principal.
Other people want to grow their money. There are annuities that are linked to the equity market indexes and provide similar market returns.
Single Premium Deferred Annuity
Also, can be referred to as a Fixed Annuity Contract. Similar to a Certificate of Deposit at the bank a fixed annuity provides a set interest rate over a set period of time and upon maturity the annuity owner, Annuitant, has the option to renew or continue the contract with the insurance carrier at the new offered rate and maturity or has 30 days to transfer the funds to another annuity, savings vehicle or investment.
A contract that provides benefits that vary directly with the investment experience of the assets that back the contract. Assets backing variable annuities, like those backing variable life policies are maintained in a separate account and the investment results are reflected directly in the variable annuity values. The separate account is referred to as sub-accounts and are like mutual funds. The account value varies according to the amount of the performance of the sub accounts.
Fixed Indexed Annuity
The indexed annuity is a hybrid of the fixed and variable annuities. The account values are based upon various equity and bond indexes. Unlike the variable annuity contract, the account value never decreases when the market index declines. The indexed annuity is a safer alternative to the variable annuity contract.