All About Annuities
Income for Life
Annuities can suppliment your monthly income, once you retire, providing a guaranteed income for life. You can customize your annuity to work how you want it to work. The choice is yours. Using annuities in your retirement strategy is one of the most effective ways to address the danger of outliving your money (which is a very real threat to retirees today).
If you want your income to start immediately, here are your options:
Single Premium Immediate Annuities (SPIA)
Immediate Annuities are the original lifetime income option. The reason for its name is because this annuity starts paying you immediately. You have the choice of having your SPIA pay you for a certain period of time or for the rest of your life. For people who want income now, SPIA’s still offer the highest contractually guaranteed income for life.
Fixed Index Annuities (FIA) with Lifetime Income
As one of the most popular financial vehicles in retirement, FIA’s provide guaranteed income for life AND a safe way to earn interest. Your interest can be a fixed rate or linked to one of the stock market indexes. With this FIA you get guaranteed income while your funds the potential for growth linked to the market upside, while having zero exposure to any downside.
If you want income for life, but you don’t need it quite yet, then these may be the best options for you:
Deferred Income Annuities (DIA)
I like to refer to this annuity as the “future income annuity,” as it allows you to defer the income and choose when you want it to start. The low fees, along with other unique features, make the DIA a top choice for many retirees today.
The Hybrid Annuity
This annuity is unique in that it allows your money to grow over time, while also allowing the value of your guaranteed income to grow. Your guaranteed income value increases each year from a set interest rate, regardless of market performance. You can then choose to turn on your income when you’re ready for it.
These annuities protect your principal, in addition to offering a unique opportunity for growth without market downside.
Multi-Year Guaranteed Annuity (MYGA)
A multi-year guaranteed annuity (MYGA) is a fixed annuity with a guaranteed interest rate. This interest rate in guaranteed to stay the same for the full length of time that the surrender charge lasts.
Fixed Index Annuities (FIA)
With this annuity your principal is guaranteed but instead of earning a fixed interest rate you earn interest linked to how the stock market indexes perform. (like the S&P 500) You have potential for upside growth with no downside market risk.
Some annuities offer guaranteed benefits that ensure your heirs are financially taken care of upon your death.
Death Benefit Options
In some cases, you can attach an option to your annuity that allows it to increase and compound annually by a set amount. This accumulated amount will bypass probate and go directly to your heirs.
"I Love You Grandpa" Option
The name really says it all. Loving grandparents, such as yourself, have the option to pass a lifetime of income on to your grandchildren.