Let an Annuity Protect and Accumulate Your Wealth on Autopilot

An annuity is an insurance product that pays out income, and can be used as part of a retirement strategy. Annuities are a popular choice for retirees who want to receive a steady income stream in retirement.

How an annuity works

You make an initial investment in the annuity, and it then makes payments to you on a future date or series of dates. The income you receive from an annuity can be distributed monthly, quarterly, annually or even in a lump sum payment. The size of your payments are determined by a variety of factors, including the length of your payment period. You can opt to receive payments for the rest of your life, or for a set number of years. How much you receive depends on whether you opt for a guaranteed payout (fixed annuity) or a payout stream determined by the performance of your annuity’s underlying investments (variable annuity).

As an example: Let’s say you invest in an annuity and don’t touch the money for 3-5 years. With a fixed annuity, you’re able to receive a guaranteed market return – for example 3% or 4%. The annuity offers you a safe haven for your money that steadily grows and is not subject to market volatility as a retirement plan would be. After five years, you can take out a portion of your money each year (usually between 10 – 20%).  

Many people at or near retirement worry they won’t have enough money from Social Security or a retirement plan to live comfortably.

Advantages of an Annuity:

  • The biggest advantages annuities offer is that they allow you to put away a larger amount of cash and defer paying taxes.
  • Unlike other tax-deferred retirement accounts such as 401(k)s and IRAs, there is no annual contribution limit for an annuity. That allows you to put away more money for retirement, and is particularly useful for those that are closest to retirement age and need to catch up.
  • All the money you invest compounds year after year without any tax bill from the IRS. That ability to keep every dollar invested working for you can be a big advantage over taxable investments.
  • When you cash out, you can choose to take a lump-sum payment from your annuity, but many retirees prefer to set up guaranteed payments for a specific length of time or the rest of your life, providing a steady stream of income.

Serene Insurance Solutions will assess your situation, help you select a rollover product that’s right for you, and will hold your hand as you fill out your paperwork. If you want help with your financial options and deciding what’s best for you, schedule your free consultation below.

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