Annuities

10 important things to know about Annuities

 Types of Annuities

• There are several types of annuities, including income annuities (like single-premium immediate annuities) and tax-deferred annuities. Each type serves different purposes and has distinct features

Guaranteed Income

• Annuities can provide a guaranteed stream of income for life or a set period, which can help address the risk of outliving your savings in retirement

Tax Implications

• Annuities offer tax-deferred growth, meaning you don't pay taxes on earnings until you withdraw the money. This can be beneficial for retirement savings

Commitment and Liquidity

• Many annuities require a significant upfront commitment. Once you purchase an annuity, accessing your lump sum can be difficult or impossible, depending on the type of annuity

Fees and Costs

• Some annuities, particularly more complex types, can have high fees. It's crucial to understand the cost structure before purchasing

Customization Options

• Annuities can be customized with various features, such as joint-life options for couples or guaranteed minimum payout periods

Role in Retirement Planning

• Annuities should be just one part of a diversified retirement portfolio, not the sole investment

Creditor Protection

• Annuities often offer some level of protection against creditors, which can be beneficial in certain financial situations

Complexity:

• Some annuities, particularly variable and fixed-index annuities, can be complex products. It's important to fully understand the terms and conditions before purchasing

Inheritance Considerations:

• Depending on how an annuity is structured, it may or may not provide benefits to heirs after the annuitant's death

Remember, while annuities can offer valuable benefits like guaranteed income and tax deferral, they also come with trade-offs such as reduced liquidity and potential high fees.

It's crucial to carefully consider your individual financial situation and goals before deciding if an annuity is right for you.

Gateway is here to help you navigate your current retirement plan choices and be a guide to the best options available. We’re only a phone call, an appointment, or email away for a free, no-obligation discussion about what makes sense for your financial situation.

Please Note: A Fixed Annuity is a long-term financial product designed largely for asset accumulation and retirement needs. Fixed Annuities generally contain fees and charges which include, but are not limited to, surrender charges, administrative fees and for optional contract riders and benefits. Withdrawals and death benefits are subject to income tax. If withdrawals and other distributions are received prior to age 59 1/2, a 10 percent penalty may apply. Fixed Annuities typically carry surrender charges for several years that may be assessed against withdrawals. Certain Fixed  product features, offered by some Fixed Annuity companies, such as stepped-up death benefit, a bonus credit and a guaranteed minimum income benefit, carry added fees. If you are investing in a Fixed Annuity through a tax-advantaged plan such as an IRA, you will get no added tax advantage. Under these circumstances you should only consider buying a Fixed Annuity if it makes sense because of the Fixed Annuities other features, such as lifetime income payments and death benefit protection. All guarantees of a Fixed Annuity are backed by the claims paying ability of the issuing insurer.