Income for Life In Retirement
Protection Benefits
A fixed index annuity (FIA) may offer you an income for life in retirement, backed by the claims-paying ability of the insurance company.
Income for Life In Retirement
An FIA is a type of annuity. As such, an FIA is a contract with an insurance company. Your money can then be used to generate monthly or annual payments. Especially if you have put that money into an income for life product, backed by the claims-paying ability of the insurance company. You can usually begin these payments once the surrender period is over. The insurance company promises to keep your money safe and to follow the terms of your policy. At age 60 or older, people typically begin withdrawing their money. However, some FIAs allow you to wait on taking an income so that your payout is potentially larger. Remember, FIAs also protect your principal.
Annuity Payments
FIAs (and fixed annuities, too) provide a set of payments to their owners.
Usually this can occur over a specific period of time. Also, an FIA may provide other benefits, too.
For example, income riders may give you the chance to increase the amount of income you receive. This may be useful if costs continue to rise. Indeed, when living expenses increase, it can be helpful to know you have an option to increase your income as well. Income for life in retirement may mean thinking through different scenarios.
Income riders so have some limitations, however. First, you should know that not all FIAs will have income riders. Second, an income rider may not be for you. While some people may benefit from this flexibility, there are costs associated with income riders. Safe Retirement Solutions is available to go over some of these options and make sure you understand your choices. We love to help make things clear and easy to understand so you can make the choice that’s right for you.
When you get income from an annuity, there may be taxes as well. For example, money taken too early out of a retirement account might mean you have to pay a 10% penalty tax. Usually your FIA account defers taxes until you take money out. Reach out to us to discuss your specific policies or some potential options that may be available for you.
The Accessibility of Your Money
An FIA contract has some benefits. First, the insurance company protect your money with its claims-paying ability. In fact, it isn’t at direct risk in the market. Instead, it links with an index. Second, your loved ones may be able to get a death benefit when you’re no longer here. Usually, this is done without probate so it saves your loved ones from having to handle that. Another benefit: you can use an FIA as income and access your money, over time.
Customizing Your Annuity
How long will you allow for accumulation? A 5-10 year accumulation period is fairly typical. By following terms of your annuity contract, you will not get charged surrender charges. Also, interest credits may be possible on your account, over time. If you don’t take income, these amounts could be allowed to grow over time. If you choose a 15 or 20 year period, you may see a slight difference in interest. However, you’d also be holding off on taking an income sooner as you might with the shorter timeframe.
Dollars and Cents
You can determine home much of your annuity you want to take as income, up to a certain amount.
There is some control in terms of how much money you take from your annuity. In the initial phase of “accumulation”, you don’t take income. However, after that term is up, your income payments may begin. Your annuity agreement will lay out the details. Talk with us about guaranteed* basic income options in retirement, backed by the claims-paying ability of the insurance company.
