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Annuities 101

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Overview

Annuities offer a tax-advantaged way to save more for retirement or provide guaranteed, continuous income that you won’t outlive. Because there are annuities designed for different needs, you can easily find the right annuity to fit your situation.

If you’re considering annuities as part of your retirement income strategy, here are fundamental information you need to know.

What is an Annuity?

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Annuities are just one of the many ways that can help you secure a steady source of income and comfortable life well into your golden years. If you’re looking into creating a stronger retirement nest-egg, you should consider including annuities in it.

There are different types of annuities available in the market today, but in a nutshell, what it does is provide a steady stream of income of a lump-sum payment to you on a future date.

How it works >>

Is an Annuity Right for Me?

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Experts say that annuities are not for everyone, but it can be the perfect complement to a well-rounded portfolio.

It depends on your needs and financial situation. You also need to look at other factors that will affect your overall financial plan such as:

  • Financial goals for the future
  • Retirement income sources such as IRAs or 401k plans
  • Willingness to leave funds in an annuity for a period of time

How to know >>


Payout Options

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If you choose to purchase an annuity, you also need to decide on how you’re going to receive payouts. To meet different needs, there are four main major payout options that you can choose from. These are:

  • Lifetime Payments
  • Income for Guaranteed Period
  • Lifetime Income with Guaranteed Period Certain Benefit
  • Joint and Survivor Annuity

Understand what these are and choose which suits you best.

See your options >>

Weighing Pros and Cons

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As with other financial products and insurance policies, annuities also have its advantages and drawbacks. It can work for you because it offers:

  • Unlimited tax-deferred investment
  • Steady retirement income
  • Multiple investment choices
  • Optional living benefits and death benefits

Meanwhile, it may not be to your advantage because of these reasons:

  • Commissions and annual fees
  • Surrender charges

Learn more >>


Pre-Buying Checklist

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An annuity is one of the major purchases that you can make, because it can affect your financial wellness today and well into your retirement and senior years. Here’s a handy list of things that you can check before you buy an annuity. This includes important factors you need to consider such as your agent, the type of annuity to buy, and the insurer.

View list >>

Cautions and Reminders

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Annuities come in different types and features. Generally, these are intended to address particular needs and goals. However, some types that seem “practical” are hardly worth the investment. Here are some things you need to watch out for when in the process of shopping around for a policy:

  • Fixed Rates vs. Banded Rates
  • Variable Annuity Transfers
  • Fixed-Index Annuities
  • L-Share or Short Surrender Annuities

Why you need to beware of them >>


Types of Annuities

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There are numerous types of annuities being offered in the market today and this is one of the reasons why some people find the product complicated and hard to understand. However, most types simply differ on when payouts will take place and the factors that will affect the amount the annuity owner will receive.

Most of the time, annuities are simply a combination of the three features below:

  • Immediate vs. Deferred
  • Fixed vs. Variable
  • With or Without Withdrawal Penalties

Which to get >>

Retirement Planning

retirement planning

Whether you’re still years from retirement or approaching this new phase in your life, here are some important facts about retirement planning that you need to know.

If you’re just about to begin your preparations, understanding these facts is essential before you begin. Meanwhile, if you’re about to retire in a few years, it’s also advisable to review these concepts and see if your plan is good to go or needs some adjustments.

Retirement planning basics >>