Income Annuities
Providing a guaranteed income stream for life
How Income Annuities Work
Income annuities are best suited for retirees that want the peace of mind of receiving guaranteed income for life.
An investment amount (premium) is paid to the carrier in exchange for guaranteed regular income payments. Payment installments can be received monthly, quarterly or annually, as determined by you.
The income stream can last for life, the life of your spouse, and with some products, you can elect to have the remaining principal passed to your heirs.
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Types of Income Annuities
Deferred Income Annuities (DIAs)
Deferred Income Annuities are purchased today, with a guaranteed income stream starting anywhere from 1 to 20 years in the future, as determined by you.
Fixed Index Annuities with Income Riders
Receive guaranteed income for life while your account value grows based on index performance.
Benefits of an Income Annuity
Are you interested in securing a stable income during your retirement years? Income annuities can provide a solution. Designed to offer guaranteed income for life, income annuities offer security and peace of mind for individuals looking to supplement their retirement savings.
Annuities can be suitable for individuals who are looking for a guaranteed stream of income during their retirement years. They can be particularly beneficial for those who want to ensure they won’t outlive their savings or are concerned about market volatility. Annuities can also be a viable option for individuals who need to consolidate and grow their retirement funds or want to protect their assets from potential creditors. It’s important to note that annuities can be complex financial products, so it’s crucial to thoroughly evaluate your financial goals and consult with a financial professional before making any decisions.
Annuities offer many advantages such as guaranteed income, tax-deferred growth, portfolio diversification, and lifetime benefits. They provide a steady stream of income that can last for the rest of your life regardless of market conditions, and the growth of annuity investments is tax-deferred. Annuities are also a great way to balance the risk of your other investments, add diversity to your investment portfolio, and can offer various lifetime benefits.
Investing in annuities can come with some drawbacks. Annuities can be complex products and come with fees. Some may come with surrender fees if you withdraw money before the contracted term ends, which can be costly over the long term. They’re typically illiquid, meaning you cannot easily access the funds once you invested the principal. Annuity payments may not keep pace with inflation, potentially reducing your purchasing power over time. It’s essential to consider these pros and cons before investing in an annuity and evaluate if it is suitable for your investment goals and risk tolerance. Consulting a financial advisor is a recommended step to help you make an informed decision.
Difference Between Income & Growth Annuities
Income annuities and growth annuities are two types of annuities that serve different investment purposes. Income annuities are designed to provide a guaranteed stream of income for a specified period or the rest of your life. This type of annuity is suitable for individuals who require a steady stream of income during their retirement years. The payments are determined by the initial premium amount, age, and expected payout duration. Growth annuities, on the other hand, prioritize the accumulation of wealth and offer lower monthly payments. Growth annuities are beneficial for individuals who are looking to grow and protect their nest egg, but don’t necessarily need income right now.
It is important to note that there are also hybrid annuities that combine income and growth features. These annuities provide more flexibility to policyholders, allowing them to select either an income or growth feature at various points during the length of the policy duration. However, the guaranteed income portion offered by hybrid annuities is often lower compared to traditional income-only annuities.
It’s essential to carefully consider your financial goals and consult with our unbiased financial agents to determine the best annuity option for your investment strategy.
Frequently Asked Income Annuity Questions
Q: When is the right time to consider an income annuity?
A: The ideal time to consider an annuity is when you’re nearing retirement or have already retired. Income Annuities can help provide a predictable stream of income during retirement, supplementing other sources of income, like Social Security or a pension.
Q: Are there any fees associated with income annuities?
A: Yes, annuities come with fees, which are often higher than other financial products, like mutual funds. These fees can include administrative charges, riders, and mortality and expense charges.
It’s important to note that income annuities can be complex financial products, and it’s crucial to understand the contract’s terms and conditions, including the fees involved, before investing. It’s always a good idea to consult with a financial advisor before purchasing an annuity to determine if it’s the right fit for your investment goals and risk tolerance.
Q: Are income annuities illiquid?
A: Yes, many income annuities are illiquid, meaning that once you invest the principal, it’s challenging to access your funds without incurring fees. Some annuities may offer partial withdrawals or options to surrender the contract for a reduced payout, but these options can come with penalties and fees.
