3 reasons annuities are used for retirement

Updated: Sep 26

Annuities offered by life insurance companies are used for:

  1. Payments starting now or later;

  2. Growth of a retirement benefit or savings;

  3. A benefit for heirs when life insurance is no longer an option;

Or all of the above, and more, backed the insurer's claims-paying ability.

Social Security and pension plan payments are examples of an "income" annuity. But when payments are deferred, it's called a "deferred" annuity.

Payments are delayed with a "deferred" annuity so your benefit or savings can growth. Growth is often tax-deferred until savings is withdrawn.

An income annuity works like a loan in reverse with you receiving payments from the insurance company. Payments to you are either for a certain period, or a lifetime so you will have no worries of running out of savings.

The "maturity" of a deferred annuity is when income payments must begin. But savings are often withdrawn long before maturity.

Deferred annuities often pay better than a bank CD and may be a better choice when you don't need the savings until age 60.

Growth in an annuity is either "variable" or "fixed:"

Variable annuities may offer a payment promise, but your savings are not safe from a market downturn. Variable annuities are for savers with investment experience and who can afford to lose money.

A fixed annuity is the way to go when no worries is the goal:

  1. Safety from a market downturn;

  2. Growth is laddered like with a bank CD;

  3. Earnings may be tied to an index strategy;

Or all of the above, and more, offering no worries of market volatility.

Savers love annuities. Call today to learn more or for a review of an existing annuity, including Social Security:

(831) 753-0507


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