What You Should Know About Annuities
Annuities are contractual investments you make through an insurance company that offer long-term retirement savings and tax-deferred growth.
Annuities can provide a guaranteed lifetime income stream on one or more lives, and can offer death benefits to assure your money passes along to your beneficiaries according to your wishes, while providing flexibility with planning your retirement.
Annuities come in different packages (fixed-rate, fixed indexed, variable) that determine how interest is credited towards your contract’s growth and how future payments are provided to you through the contract.
You should consider that annuities, the plethora of insurance companies offering them, and the widely differing professional experience levels of the licensed agents selling them can create an environment of complexity and/or confusion. As such, the National Association of Insurance Commissioners (NAIC) offers a helpful consumer publication, "NAIC Buyer’s Guide for Deferred Annuities", to help you understand how annuities can be different from each other so you can choose the type of annuity that’s best for you. Please visit the National Association of Insurance Commissioners to learn more and to request a copy of this informational consumer guide.
When might a deferred annuity be a good choice?
Any of the following criteria can help to determine if a deferred annuity might be right for you:
You need to start saving for retirement
Deferred annuities can be funded with flexible payments or with steady regularly scheduled payments. Not only can your money grow tax-deferred inside an annuity, those funds can experience the powerful long-term effects of compounding interest/growth over time, providing an ever growing future source of retirement income.
You’re a conservative investor
Deferred fixed-rate annuity contracts are available that can guarantee the safety of your principal and/or guarantee that a minimum interest rate is credited to your funds periodically. If you simply aren’t comfortable assuming investment risk for your retirement funds and safety of principal is important to you, finding the right deferred fixed-rate annuity might be a good choice for you.
You’ve maxed out other retirement plans
Deferred annuities are potentially an alternative retirement planning option for you to set aside funds towards your retirement if your contributions to other retirement plans, like an IRA’s or 401(k), have reached your maximum annual limits.
You won’t need to access the money soon
Deferred annuities require a time commitment. Most deferred annuity contracts contain early surrender charges designed to deter you from withdrawing funds from the contract too soon. If you are saving for retirement and don't anticipate needing the money from the annuity contract prior to the time you turn 59½, or if you are already past 59½ and considering an annuity, you’ll likely need to be committed to having those funds tied up for a minimum of five years or longer, depending on the annuity contract you select.
You need retirement income guarantees
Deferred annuities, unlike any other savings vehicles, can insure an income stream that is guaranteed for a set number of years or that can never be out-lived for as long as you live. Further, income payments can continue to your spouse and/or loved ones for a set number of years beyond your life with proper annuity structuring. If you need assurance that you can receive income that will last your lifetime or longer, then an annuity might be right for you.
Advanced Planning with Annuities
Annuities are often used to solve other more advanced financial planning applications, including estate planning matters, long-term care planning strategies, divorce planning matters, business planning strategies, and retirement pension planning strategies.
Why Lakeland for your annuity needs?
Mark W. Petro is an experienced annuity agent dedicated to helping his clients solve their retirement income and legacy planning needs. Annuities can be a helpful financial tool towards creating income tax deferred growth of your investment and helping you to receive steady monthly income payments during your retirement years, or even sooner if needed. Mark’s wealth advisory/estate planning experience and highly experienced annuity support networks are available to help you determine how annuities might best fit your overall wealth picture, and which annuities might be most appropriate for your specific circumstances.