Annuities

A fixed annuity can help you accumulate tax-deferred earnings as part of your overall retirement plan. Annuities offer the opportunity for lifetime payments and tax-deferred earnings and provide a guaranteed death benefit for your beneficiaries. All guarantees are backed by the continued claims-paying ability of the issuing insurance company.

You may want to consider investing in an annuity as part of your long-term financial strategy if:

• You’re in a higher tax bracket and want to defer additional income.
• You’ve reached your deductible limit on all your retirement accounts and wish to save more for retirement.

An annuity is different from most other retirement savings vehicles. It’s actually a contract between you and an insurance company. In return for making one or more premium payments, the insurance company agrees to provide you an income stream, usually during retirement. You can elect to receive payment all at once or as a series of payments, even for the rest of your life.

Indexed Annuities

Indexed annuities—also known as “equity-indexed annuities” or “fixed-indexed annuities” are financial instruments that have characteristics of both fixed and variable annuities. Indexed annuities offer a minimum guaranteed interest rate combined with an interest rate linked to a market index, hence the name.

Many indexed annuities are based on broad, well-known indices like the S&P 500 Composite Stock Price Index. But some use other indexes, including those that represent other segments of the market. Some indexed annuities allow investors to select one or more indexes. Because of the guaranteed interest rate, indexed annuities give you more risk (but more potential return) than a fixed annuity, but less risk (and less potential return) than a variable annuity.