Annuities
Understand the Benefits

Benefits Of Annuities For Retirement

Since fewer employers offer options for retirement strategies, you may be looking for ways to protect and grow your money. Fixed index annuities are a part of a broader strategy that can help to build, protect, and preserve retirement income. 

Key Benefits of an FIA

The advantages of a fixed index annuity help keep retirement income planning on track.
Tax Deferral

The earnings on fixed indexed annuities accumulate tax deferred, You won’t have to pay taxes on 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 are 59 1/2.

Indexed Interest Potential

Your annuity can earn interest based on the accumulation of an index outside the annuity. Due to the fact that you’re not actively participating in the market, you are not putting your annuity at risk.

Income Protection

Fixed index annuities can provide you with a degree of protection that you might find reassuring. This protection can be helpful to you in three ways:

  • Accumulation:  Fixed indexed annuities are designed to help you accumulate funds to protect your principal. 
  • Guaranteed Income:  Annuities provide retirees with guaranteed income throughout their lifetime.
  • Leave a Legacy. An FIA provides your loved ones with a death benefit if you pass away before you begin taking annuity payments. (Also, if structured properly, the death benefit can avoid probate.)

Fixed Index Annuities and Interest Rates

There are a few factors that determine the index rate of an FIA. Usually, the insurance company issuing the contract sets the interest rate of the annuity. Our company only works with reliable insurance providers. In general, you should aim for a reasonable rate of return. Often, they provide lifetime income. While you may not receive a high return with this low-risk purchase, you will not lose money either. You can maintain a reasonable return on your hard-earned money while keeping your assets secure.

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Fixed Index Annuities And The Stock Market

Fixed index annuities are insurance products. Therefore they are not invested directly in the stock market. The insurance companies will instead use what’s called an “index.” Even though these products are not directly invested in the stock market, they earn interest based on an external index. Insurers guarantee the minimum interest rate. If the stock market declines, it’s the insurance company, not you, that bears the risk. With an FIA, the interest rate remains the same regardless of stock market fluctuations. If the stock market falls, your FIA remains unaffected.

Discover Your Annuity Options

Consider all your options when choosing annuities for retirement. With the help of our experienced professionals, you can make the choice best suited for your needs. The team at TW Retirement Strategies is ready to assist you.

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