Securing adequate retirement income is a major concern for many Americans. Annuities that offer a guaranteed fixed rate of return and tax deferral on earnings, as well as income that can last for life, can be an appealing money management option for present and future retirees with a low risk tolerance and/or a need to diversify assets.
When you purchase a fixedannuity, you receive a guarantee that your money will earn interest at a specified rate and that your return (the money paid back to you) will occur on a set schedule in fixed amounts. You can purchase an annuity with one lump-sum payment or payments made in installments. Payouts to you can begin immediately or at a future time—they are usually scheduled for retirement—and can last for your lifetime or another scheduled length of time. Earnings on premiums are tax deferred.
Fixed annuities can be an important part of your overall savings and income strategy, helping to meet diverse financial goals and objectives. If you are currently saving for retirement, a fixed annuity can help supplement your existing long-term vehicles, such as a 401(k) plan or an Individual Retirement Account (IRA). If you are a retiree, a fixed annuity can provide you with a regular income stream during your golden years. Remember that, in order to plan for the future, you must consider it before it occurs.
Note: Fixed annuities are neither insured nor guaranteed by the FDIC; they may decline in value if surrendered prior to maturity. Guarantees are based on the claims-paying ability of the issuing company.