Understand the Basics
What Is An Annuity?
If you’ve begun researching retirement options, you might wonder, “What is an annuity?”
Annuities: Understand the Basics
Annuities are sometimes used as a way to provide income in retirement. Different types of annuities do different things. For example, fixed annuities, fixed index annuities (FIAs), and variable annuities have different structures. Fixed annuities may offer protection of principal. However, the interest rate is one set amount and it doesn’t change. Usually, it has a lower rate than an FIA or variable annuity, but not always. Variable, on the other hand, has a higher risk. That’s because your money is still at risk in this type of annuity. Yet, FIAs don’t have this type of risk. Instead, an FIA may offer a reasonable rate of return, over time, as well as principal protection.
So, what is an annuity when it comes to retirement? Further, how do you know if an annuity may be useful for your situation? Safe Retirement Solutions is here to help you discover those answers and more. We don’t believe in making things overly complicated or difficult to understand. Instead, we want you to get your questions answered. We want you to be knowledgeable enough to make an informed decision about your retirement. If something is unclear, let us know. After all, you deserve to have all the information you need. Then, you can make the retirement decisions that are right for you.
Truth or Not Truth?
What is an annuity truth?
It seems there may be some misconception about what an annuity is or what it does for people. Simply put, an annuity is a contract. A person enters into an annuity contract with an insurance company. In this contract, the company commits to protecting your principal (with certain stipulations). The deposited money in the annuity is designed to be safe from loss. FIAs also may provide a reasonable rate of return, over time. Money in an FIA links with an index (not the market). Therefore, an increase in the index means a potential index increase in your annuity, over time. Yet, your money may remain intact if the index were to drop.
Income for life is another potential use of an FIA. What is an annuity if it offers lifetime income, backed by the claims-paying ability of the insurance company? It may be part of a person’s retirement. FIAs may also give you options for leaving money to your loved ones after your death. In addition, FIAs may have some optional benefits, too. If the cost of living rises, for example, an FIA may have an option to increase your income. However, no two policies are the same so be sure to consult with someone about your specific situation.
Are all annuities the same?
In short, no. For example, variable annuities have inherent risks that FIA’s do not. First, an FIA does not invest in the stock market directly. Variable annuities, on the other hand, do.
Complimentary Seminar
Want to discover more information about "safe retirement solutions?"
We encourage you to attend one of our events. Our no-cost dinner seminars provide education on retirement options you may not have thought of. We’ll cover: “What is an annuity?” and review information about taxes, distributions, and more. Sometimes, we invite guest speakers to come discuss a “state of the economy” or other related topics.
If you prefer a meeting in the office (as opposed to a seminar), schedule an appointment. In our chat, we can include:
- Current policies held (and their features/benefits)
- Tax-deferred options for your money
- Ways to save for emergencies
- Could I have any type of rate of return over time?
- And more…
Green or Red Line - You Choose
Let’s pretend we’re looking at a chart. One line goes up and down (several times). That’s what we call the “red line.” Some retirement options are like this line. However, others, such as an FIA, are better represented by a slow but stable line. That’s what we call the “green line.” With an FIA, you may be able to keep your retirement saving safe.
Call Us Today - Let's Connect
Looking to learn more? Come visit us at one of our seminars. Or, just contact us for an appointment. Together, we can find out “what is annuity?” and learn how it may fit into your plans.
