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Retirement Benefits

ANNUITIES

What is an Annuity?

An annuity could be a good source of retirement income. Annuities provide retirees with the option of fixed, regular payments. So, how does it work, utilizing annuities as a source of retirement income? Let’s first discuss what an annuity is.

DIFFERENT TYPES OF ANNUITIES

The different types of annuities include Fixed Indexed Annuities (FIAs), Fixed Annuities, and Variable Annuities.

A fixed annuity can protect your money but has a fixed interest rate. The rate is usually lower than the rate you could receive from an FIA or variable annuity. A variable annuity, meanwhile, comes with higher risk. The rate of a variable annuity is determined by the stock market. As a result, your principal balance is at risk in the event of a market downturn.

FIAs, on the other hand, aren’t invested in the stock market. An FIA is a contract with an insurance company that generates interest through an index. An extra benefit of an FIA is how the issuing insurance company protects your retirement savings. This keeps your hard-earned money safe. Additionally, FIAs allow for a reasonable rate of return**.

a group of 5 happy senior citizens walking together

WHAT IS ANNUITY INCOME?

Annuity income is a way to pay for your lifestyle in retirement. If you choose an FIA, this income could last you the rest of your life. Click here to learn more about planning for your retirement income.

Misconceptions about Annuities

You may have heard some professionals say annuities are bad. Why do they say this? For one thing, it’s important to keep in mind that not all annuities are the same. Some annuities are just as risky as investing in the stock market. A variable annuity puts your principal at risk. When considering a financial retirement strategy, it’s important to think about your risk tolerance. Some types of annuities, however, like FIAs, can provide protection of principal as well as a reasonable rate of return**.

Annuities Then vs Annuities Now

Retirees didn’t always have this many annuity options available. Previously, you typically had to choose between safety of principal and a reasonable rate of return**. Having only one of these benefits isn’t really beneficial to retirees. Over the last decade, the annuity industry has changed. There are now annuity products that can offer both of these benefits. In addition, you can choose from extra benefits such as income riders, long-term care benefits, and various beneficiary options.

Red Line Vs Green Line

Some people don’t mind the ups and downs of the stock market (the red line). Most people, however, prefer to keep their principal protected (the green line). At Summerlin Benefits Consulting, we use the green line strategy to help clients ensure they don’t run out of money, regardless of what happens in the market.

Find Out How!