Annuities offer many options for retirees and pre-retirees to increase their retirement savings and guarantee retirement income that cannot be outlived.
Funding your annuity
Nonqualified money is money that you have already paid taxes on, such as wages earned from a job, or money situated in a savings account, bank CD or other investment product that is not part of a tax qualified account.
Tax qualified funds, such as those held in an IRA or 401k account, are funds that have not yet been taxed.
Annuities are tax deferred
Tax deferral of investment gains, your contributions and earnings can grow tax-deferred until you start to withdraw funds.
Two different categories of annuities
Accumulation focused is for saving for a long-term goal like retirement.
Income focused provides reliable income payments that can last for the rest of your life — no matter how long you live.
Types Of Annuities
Single Premium — An annuity where you pay the insurance company only one premium payment. Flexible Premium — An annuity where you pay multiple premium payments to the insurance company.
Immediate — An annuity where income payments to you start immediately, but no later than one year after you pay the premium.
Deferred — An annuity where income payments are not scheduled to start for several years after you pay the premium.
Fixed — An annuity where your money, less any applicable charges, earns interest at rates set by the insurance company or in a way specified in the annuity contract.
Equity Indexed — A variation of a fixed annuity where the interest rate is based on an outside index, such as a stock market index. The annuity pays a base return, but it may be higher if the index goes up.