Annuity

What Is the Difference Between Immediate and Deferred Annuities?

What Is the Difference Between Immediate and Deferred Annuities?

Annuities are a growing option for retirees looking for relatively ‘worry-free’ places where they can place their money without too much stress. There are many different types of annuities. But all annuities can fundamentally be divided into two main categories: immediate and deferred annuities.

By definition, an annuity is when someone puts a single lump-sum payment or a series of payments into a contract offered by a life insurance carrier. At a later point, this person starts receiving a stream of income from the annuity contract. The income stream can be for either a set period or the rest of their life.

So, what are the key differences between a deferred and immediate annuity? Here’s a quick look at the overarching distinctions. Read More

Should You Buy An Annuity At Age 50?

Should You Buy An Annuity At Age 50?

Chances are you have heard of annuities at some point. When they have a clear role in your plan, they can be an excellent part of a retirement strategy. If you are in your 50s, you might have thought at some point or another: Does an annuity make sense in your 50s, even when retirement might seem still quite a few years away?

Well, the answer rests on three primary factors: when you plan to retire, what your timeline is from now until then, and what you would use the annuity for. Read More

How Annuities Can Help You Maximize Your Retirement Income

How Annuities Can Help You Maximize Your Retirement Income

When the World War II generation finally retired, many former workers were able to count on a secure corporate pension to supplement their Social Security income. This pension income lasted for as long as they lived. Then it often continued to pay the surviving spouse after the initial recipient had passed away.

But pensions have largely disappeared from the corporate landscape. In turn, this has left an unexpected hole in the retirement plans of many retirees.

However, many people have found an alternative in annuities as a way to generate guaranteed income that they can count on every month. Annuities can provide a type of privately-funded pension income in a manner unlike any other type of financial instrument in the marketplace today.

Annuities are designed to pay a stream of guaranteed income for as long as someone lives. This holds even if someone receives more money from the insurance company than what was in their annuity contract. Read More

Why Consider Annuities in a Low Interest Rate Environment?

Why Consider Annuities in a Low Interest Rate Environment?

Annuities can certainly strengthen your retirement plan even while interest rates are low. Among other things, they can add more predictability and stability to what you already have.

But what can you do when interest rates are at rock-bottom? In response to the economic fallout from the coronavirus pandemic, the Federal Reserve has dropped the target rate for its benchmark federal funds rate (its overnight lending rate to banks).

Now the target range for this rate is zero to one-quarter percent. The last time the Fed did this was during the financial crisis. In 2008, it dropped the rate to the same target range, and this didn’t change course until December 2015.

The pandemic had an unprecedented impact on the economy. It put tens of millions of people out of work in just weeks and left many sectors basically on standstill. Read More

How Can Annuities Help You Avoid Probate?

How Can Annuities Help You Avoid Probate?

Estate planning isn’t likely to rank high on your list of fun things to do. Thinking about a post-death legacy and what you wish for loved ones probably isn’t high up there, either.

But having a proper estate plan is beneficial in many ways. It can ensure that your assets are distributed in the manner that you desire after you are gone.

Depending on the size of your estate as well as your state of residence, you may be facing estate taxes on your assets. There are ways that you can reduce that tax liability if you might choose so.

But one legal process can also derail your legacy wishes, tie up your assets for a long time, and lead to family drama that otherwise wouldn’t happen: probate.

The good news? One way that you can avoid probate on some of your assets for certain is if you have money in annuities.

With how they are treated under law, annuities exempt the money within them from this often time-consuming and drawn-out proceeding. Read More

Do Annuities Offer Creditor Protection?

Do Annuities Offer Creditor Protection?

Annuities are contracts between you and an insurance company. As the policyholder, you are entitled to certain guarantees provided to you by your life insurance company.

You can enjoy guaranteed income for life, guaranteed growth, guaranteed protection against market risk, or a guaranteed death benefit, among many other benefits.

Annuities also give the benefit of tax-deferred growth until you start withdrawing money from them. Not only that, annuities can also provide you with certain protections against creditors.

However, this helpful protection characteristic of annuities can vary by state. Here’s a quick look at how annuities can offer various creditor protections if you are concerned about the exposure of your assets or money. Read More

What Enhanced Benefits Can Come with Annuities?

What Enhanced Benefits Can Come with Annuities?

Arguably the greatest benefit that an annuity can bring to a portfolio is protection. But depending on the contract you get, the annuity may provide enhanced protection for you in different qualifying circumstances.

These enhanced benefits can protect you against a number of financial risks. Those risks can range from confined care in a nursing home facility to home-based care and death benefit protection.

Some contracts have these as built-in features. In other cases, most enhanced benefits come as insurance contract add-ons, or annuity riders. Many of these enhanced benefit riders come at an additional charge.

You should be sure of what that enhanced annuity benefit specifically gives you, what it doesn’t give you, how much it costs, and whether it truly makes sense for your situation before confirming any add-ons to your contract.

Even so, enhanced benefits can be a great supplement for the right financial situations. Here’s how different enhanced benefits for annuities might help your retirement security in various situations. Read More

Does an Annuity Make Sense for Your Portfolio?

Does an Annuity Make Sense for Your Portfolio?

If you have heard of annuities, you might wonder if they are right for you. Some advisors use annuities as part of the financial strategies that they create for their clients. Other advisors aren’t as much a fan of them.

Sometimes annuities get a fair amount of negative press. However, when they are used as a solution and are structured properly, annuities can actually be a great solution as part of your portfolio.

So, how can you tell if an annuity makes sense for you? Here are some reasons why one of these guaranteed insurance contracts could be a good addition to your portfolio.

Let’s take a look at how fixed annuities and fixed index annuities might be of benefit. Read More

Questions to Ask About An Annuity

Questions to Ask About An Annuity

Millions of Americans depend on annuities for retirement and for tax-advantaged accumulation. But if you are considering one, you might be unsure about which questions to ask about an annuity. Beyond that, you also want to be able to judge whether a specific annuity product is right for you.

Essentially, an annuity is a contract between you and a life insurance company. The contract provides tax-deferred growth for your money and different choices for your payout options: a lump-sum payment, income for life, or income for a set period.

Most annuities are started with money from retirement accounts — 401(k) plans, IRAs, or Roth accounts. But you can also purchase an annuity with personal savings or proceeds from a transaction like a home sale. The money you use to begin your annuity contract will have its own tax implications, so keep that in mind as you consider your options.

Determining what annuity is right for you is up there with other important retirement decisions. After all, these are your life savings.

You want to be sure that you bought the right annuity contract — if indeed it does make sense for you — and that its unique features and benefits solve for the existing gaps in your portfolio.

Here are some questions to ask about annuity options that can help you narrow down your choices to the right fit. Read More

Fixed Annuity vs. CD — How Do They Compare?

Fixed Annuity vs. CD -- How Do They Compare?

If you are looking for a decent rate for your money, your local bank might not offer much to write home about. We already are in a low-interest rate environment, and the Fed doesn’t appear to be ready to raise rates anytime soon.

This is, of course, one of the effects of recent public health and economic conditions, which also might not be winding down anytime soon.

When it comes to earning interest, one option that banks offer is a certificate of deposit. Read More

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