Annuity … silly name, but a powerful investment tool. An annuity is a long term investment designed to help protect you from the risk of outliving your income. The simplest explanation is that an annuity is a scheduled set of payments that exist for a predetermined period of time. The schedule for and amount of the annuity payments will rely largely on your retirement goals and the period of time until you retire. Once you have made your scheduled payments, or investments, you will be able to begin receiving payments. These disbursements will serve as your retirement income.
The upside of annuities, is that they are flexible. You can choose one that enables you to:
- Invest a lump sum or invest over a period of time
- Start receiving payments immediately or at some later date
- Select a fixed, variable or indexed rate of return
Whether your needs are immediate or long-term, you can choose the type of annuity whose features work for your situation:
- Variable – With a variable annuity, you choose investments and earn returns based on how those investments perform. You can choose investments that offer different levels of risk and potential growth, depending on your investment goals and tolerance for risk.
- Immediate – An immediate annuity is usually purchased with a lump-sum and guaranteed income starts almost immediately.
- Fixed – With fixed annuities, the principal investment and earnings are both guaranteed and fixed payments are made for the term of the contract.
- Fixed Indexed – This special class of annuities yields returns on contributions based on a specified equity-based index, such as the S&P 500.
Just like obtaining homeowners insurance, planning for your retirement is an important part of ensuring you are financially secure for the rest of your life. Annuity policies are a great way of setting up a fixed or guaranteed income for your retirement.
Let us help you think outside of the box when it comes to protecting your future. Give us a call today!