Your Guide To
WHAT ARE THEY?
Annuities Are Retirement Strategies
Annuities are can be an excellent retirement strategy, but what exactly are they? Retallick Financial Group can help you in understanding annuities. A fixed index annuity is simply a contract between you and an insurance company that may help you reach your financial goals for retirement. You pay your premiums like other insurance products, but in exchange the insurance company provides you with income. This can start immediately or sometime in the future.
HOW A FIXED INDEX ANNUITY WORKS
Indexed annuities have two phases. First, there’s an accumulation phase.This is the time that you let your annuity earn money. Second, is the phase in which you received money from this annuity. This is referred to as the distribution or payout phase.
A fixed index annuity is backed by an insurance company. This insurance company guarantees that you will receive, at the very least, the minimum guaranteed interest that was discussed and agreed upon in your contract. The ability of the insurance company to pay claims, is your safety net.
One of the tax advantages of a fixed index annuity is that you defer paying taxes on the interest your annuity accumulates, until you start receiving money. Since your interest is tax-deferred the money in your annuity contract can grow quicker!
So, how does the market figure into all of this? Since your contract is backed by the insurance company you principal and your bonus are never affected by fluctuations in the market..
PHASE ONE: ACCUMULATION
As soon as you purchase your annuity, the accumulation phase starts. Your annuity can earn a fixed rate of interest that is guaranteed by the insurance company or an interest rate based on the growth of an external index.
PHASE TWO: DISTRIBUTION
As soon as you start taking money out of your annuity, you enter the “Distribution Phase.” You can always take income payments in the form of scheduled annuitization payments over a period of time, including your lifetime. And many fixed index annuities allow you to take income withdrawals as an alternative to annuitization & payments. Either way, you can choose from several different payout options based on your personal needs, including options for lifetime income, guaranteed.
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