ANNUITIES
Annuity Quick Reference Guide
Annuities are vastly unheard of and also misunderstood . These retirement products have been given a bad rap , mostly as a result of competing financial services vehicles .
Many have never heard of annuities . Perhaps the easiest way to grasp the concept of annuities is to first discuss life insurance products . Life insurance is a contract that pays a benefit in the event you die unexpectedly . In turn , annuities are a contract that pay a benefit in the event you live too long . Annuities are a vehicle that is used to save for one ’ s retirement , just as some use certificates of deposit ( CDs ) and 401 ( k ) s . At a given point in every annuity , you can change it from a retirement savings vehicle , to a retirement income stream , through a process called annuitization .
Annuities are vastly unheard of and also misunderstood . These retirement products have been given a bad rap , mostly as a result of competing financial services vehicles , and the advisors that offer them . Yet , the top concern of Americans continues to be guaranteeing a minimum level of income during their retirement years .
Coincidentally , annuities are the only financial instrument that can guarantee the purchaser an income for the rest of their life .
Annuities have long been known for their tax deferral qualities . Purchasers can use money that has not yet been taxed , to purchase the annuity . Thereafter , taxes are not paid until money is withdrawn from the contract . Plus , annuity purchasers earn interest on their interest . AND , those that purchase annuities earn interest on the tax savings that they would have paid as income taxes .
This is often referred to as the “ triple compounding ” benefit , which is available through annuities .
Sheryl Moore is President and CEO of the life and annuity market research firm of Wink , Inc . Her company provides competitive intelligence , market research , product development , consulting services and insight to select financial services companies . She may be reached at sjm @ intelrockstar . com .
On page 51 are some features of annuities that can be used as a reference for those wanting more information about these valuable retirement planning and retirement income products . If you require additional information about annuities , please reach out to your financial professional . If your financial professional does not offer annuities , search for a professional that does . Annuities can be an integral part of your retirement savings plan . If you are interested in exploring if annuities are right for you , and your financial professional does not offer annuities , they may not necessarily be acting in your best interests . Reliable and credible information about annuities is available through third-party market research firms that do not endorse any company or product , via an internet search of the word “ annuity .”
50 Perspectives Q1 2021