Important Information About
Annuities
Learning About Annuities For Retirement
An annuity is a contract with an insurance company, in which you receive payments at set intervals. People usually use annuities for retirement, as a method of saving money and gaining an income you can’t outlive. There are different types of annuities. For example, fixed annuities, variable annuities, and fixed indexed annuities (FIAs). While there could be recurring income payments available with all of these annuities, only fixed annuities and FIAs provide protection of principal. Generally, this fixed term lasts you your entire life. For this reason, these are the types of annuities we specialize in.
Read About The
Phases of An Annuity
An annuity agreement has two main phases. While the details of each individual contract differ, these two steps will always apply to FIAs. Accumulation phase, and distribution phase.
Accumulation
This is the first phase of an FIA. It involves waiting and letting your money grow. Regardless of market conditions, an FIA will grow with a set interest rate. Additionally, it could potentially provide greater returns when the index rises, on top of protecting your principal when the index falls. This phase allows your money to grow steadily, provided you leave it where it is.
Distribution
This second phase begins when you access and use your funds, or when lifetime income begins to be distributed. There are several ways you can choose to receive payments. For example, you could schedule withdrawals to receive payments monthly, quarterly, or annually. Furthermore, you could select to receive an income for life. An FIA could allow you to withdraw these payments at a set time, without penalty.
What is an FIA?
An FIA is an annuity that maintains its value over its term, while keeping your principal amount safe from the risks of the stock market. You make periodic payments and receive regular payouts in return. When using a fixed indexed annuity for retirement, you can ensure* you won’t lose your money.
Key Benefits of Fixed Indexed Annuities For Retirement
The earnings on FIAs accumulate tax-deferred. What this means is, you won’t have to pay taxes on the interest earned on your annuity until you withdraw it. Withdrawals are taxed as ordinary income. By compounding interest, you can accumulate your money faster. An additional 10% federal tax may apply if retirees take payments before they reach age 59 1/2.
Your annuity earns interest based on the accumulation of an index, outside the annuity. Because you aren’t actively participating in the market, you aren’t actually putting your money at risk.
Get in touch with us to explore your retirement options. You don’t have to pick between our core values, it’s possible to achieve all three. Safety First Money Group can help get you the information you need to find out if annuities for retirement could be the right option for you. Call us to schedule a meeting today, to see if what we offer is right for you.