Annuities are just one tool in generating income during retirement. Depending on your own situation, they may be the right product for you.  Keep in mind that there are a variety of types of annuities, each with advantages and disadvantages.

Are fixed annuities the right tool for you?

A fixed annuities may make sense for you, or it may not. Here are some considerations to help you:

You should consider buying a fixed annuity if…

  • You have money to invest for at least 3 years but want access to it within 10 years
  • The money you’re investing is earmarked for retirement or to be passed on to heirs
  • You’ve already maxed out your IRA or 401(k) contributions
  • You want greater certainty and principal protection
  • You have other assets in the market exposed to higher expected returns
  • You want to preserve some liquidity

You should probably NOT consider buying a fixed annuity if…

  • You need to access your money within 3 years or before age 59½
  • You aren’t maxing out IRA or 401(k) contributions
  • You’re interested in high risk investments and willing to risk principal to achieve it
  • You’re interested in generating income in retirement

Some general considerations

A fixed annuity is… an annuity.

  • An annuity is an insurance product in which a lump-sum amount is exchanged for a stream of future payments. What makes a fixed annuity an annuity is that it has the option to annuitize at the end of the contract term. You can also choose to leave your money invested at a renewable rate, withdraw all or a portion, or roll it over into a new fixed annuity. The distinction of being an annuity gives it tax-deferred status.

A fixed annuity is… an accumulation annuity.

  • An accumulation annuity is designed for the growth potential of the money invested.  It is not necessarily designed for the ability to turn that money into income (as is the case with an income annuity). During the accumulation, or deferral, period your money will be invested with an insurance company and grow on a tax-deferred basis. While your money is invested, you will have some access to your money – typically the interest or 10% of your balance. Accumulation annuities grow either at a fixed rate (like fixed annuities) or grow based on market performance (as with variable and indexed annuities).

A  fixed annuity is… a multi-year guaranteed accumulation annuity.

  • Fixed annuities earn a fixed rate over a multi-year time horizon. The interest rate will be specified upfront and will vary based on the amount you’re investing, your investment horizon, the credit rating of the insurer, and market conditions at the time of purchase. At the end of the guarantee period, the rate may change.


Next Steps…

Contact us today and ask for your free no-obligation quote. We will help you explore a variety of insurance options and discounts. Call us at 1-800-497-6114 or email us. Alternatively, have an insurance-licensed Sunvalley Insurance representative contact you.