Is a Fixed Annuity Right for You?

Fixed Annuities May Be Appropriate If You:

  • Are nearing retirement or are retired (age55+) **** You may be interested in adding to your retirement nest egg.

  • Are looking for guarantees ****** You may like the issuing insurance company's guarantees of stability of principle and interest. (Guarantees are based on the financial strength of the issuing company.)

  • Want a regular source of income after retirement **** Annuitization (the process of converting an annuity into a stream of payments) offers you lifetime income or other income choices.

  • Are averse to risk ***** You may like conservative features of a fixed annuity (stability of principle, interest guarantee, annuitization, etc…) Keep in mind growth potential is limited compared to other investments.

  • Are concerned about taxes **** Fixed annuity earnings are not taxed until withdrawal or surrender. (There are penalties for early withdrawal, and any distributions are taxed as ordinary income.)

  • Are looking to invest interest, dividends or capital gains. **** Income from your portfolio is not needed for living expenses, therefore making it available for reinvestment.

  • Want emergency access to your money. **** A certain percentage of the premium or account balance of the fixed annuity is typically available free from surrender charges, however withdrawal of the gain are taxed as ordinary income and if taken prior to age 59 ½ , may be subject to an additional 10% federal tax penalty. Most annuities have surrender charges in the early years of the contract.

  • Wish to minimize estate administration headaches for your loves ones. **** Named beneficiaries on a fixed annuity contract generally receive death proceeds without the expense and delay of probate; however they are still subject to ordinary income tax on any gains.

A fixed annuity can be an excellent choice for the right individual. If you feel that you may fit the profile, contact a financial representative to learn how to make a fixed annuity part of your investment plan.


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