Annuities
Annuities are long-term investments designed to pay out over the course of your life. Annuities can protect you from outliving your income by paying you in fixed amounts throughout your retirement. Annuities come with many benefits but do have some risks associated with them as well. Let’s take a closer look at the common questions we see for annuities.
What types of annuities are there?
- Fixed Annuities: Fixed annuities pay a fixed interest rate for a specific period of time.
- Immediate Annuities: Guaranteed fixed income payments within a year of the contract. Clients have a few options on how they’re paid.
- Fixed Index Annuities: Interest on your annuity is based on an index such as the S&P 500. But, your money is not actually invested in that index, so you don’t risk losses based on market fluctuation.
How much are annuities?
The cost of an annuity typically starts at $10,000 and goes up from there. You choose how much you would like to contribute. How much an annuity pays you per month will depend on how much you have given the insurance company.
Why should I invest in an annuity?
Annuities are purchased to provide a steady stream of income in retirement. If you are wanting a steady stream of income in retirement, you should talk to an advisor about your options.
Deciding if an annuity is right for you is a decision only you can make. Our financial advisors can walk you through your options on annuities and you can decide what is the right path for you. We have several options from many great insurance companies.
Frequently Asked Questions
What is the difference between immediate and deferred annuities?
An immediate annuity generally begins issuing payments shortly after it is funded, while a deferred annuity is designed to begin payments later. The appropriate option depends on your financial goals, income needs, and expected timeline.
How do fixed, indexed, and variable annuities differ?
These annuities use different methods to calculate potential growth and involve different levels of risk, fees, and guarantees. Texas consumers should carefully review the contract and discuss the differences with a qualified financial or insurance professional.
Can I withdraw money from an annuity early?
Withdrawals may be permitted, but they could be subject to surrender charges, contract restrictions, market value adjustments, or tax consequences. Review the annuity contract and consult a tax professional before withdrawing funds.
What happens to an annuity when the owner dies?
The outcome depends on the contract, selected payout option, beneficiary designation, and whether payments have begun. Some annuities may provide a benefit to designated beneficiaries, subject to the contract’s terms.
What fees or charges should I review before purchasing an annuity?
Potential costs may include surrender charges, administrative expenses, rider fees, and investment-related expenses. Fees vary significantly, so consumers should understand the contract before making a long-term commitment.