Annuities

Over the next 12 years, more than 10,000 baby boomers will retire each day, yet a large portion of these people consider themselves unprepared for life after work. In fact, it is estimated that over 58% of workers aged 55+ have less than $100,000 saved to last throughout their golden years. 

Our clients are often seeking guidance on an variety of financial objectives, including protection against investment losses, how they can guarantee sufficient income for healthcare and other long-term costs, as well as ways to earn higher potential returns on their existing guaranteed income while addressing tax and estate planning concerns.

Because we all know there is an uncertainty to government benefits like Social Security and Medicare, it is important that boomers and members of future generations will all be focused on one common goal: establishing a significant and lasting source of income. Our representatives at HTR Group can help provide personalized annuity solutions to fit your needs, so contact us today!

Annuity Features and Benefits

Annuities are insurance products filed with and approved by state insurance regulators. Fixed annuities have zero market risk, and owners of fixed annuities do not participate directly in any financial market. Whether interest is declared in advance or determined by the performance of a fixed market index, any interest, along with the premiums paid, is guaranteed to never go down when the markets do.

Insurance Protection: Unlike the money you save in your bank accounts, annuities do not have FDIC protection. Insurance companies display their financial strength by obtaining a rating from an objective rating firm like Standard & Poor’s, A.M Best, Duff & Phelps, or Moody’s.

Liquidity: Annuities have some provisions that allow money to be withdrawn. Generally, 10% of the account value is available for withdrawal, and many contracts allow earned interest to be withdrawn on a monthly basis. Additionally, there are contract provisions that allow access to all your funds in the event you are hospitalized, contract a life-threatening illness, are subjected to a permanent or extended stay in a nursing home, or experience another major calamity that affects you economically.

Annuities can also be structured to pay-out for the life of the owner for a fixed term, which can help to spread out your tax burden while providing enhanced income security. Annuities are long-term savings vehicles and may require a 10% federal tax penalty for withdrawal of funds that exceeds those discussed above prior to age 59 ½.

Tax Treatment: All annuities grow tax-deferred, however, special actions must be taken with both qualified and non-qualified accounts. Taxes are only paid when money is withdrawn. The taxes that are being deferred remain in the account to earn you more money, rather than being paid to state and federal agencies every year.

Interest Rates: There are several variations of annuities; a fixed annuity provides a guaranteed minimum return by the issuing insurance company. A common guarantee on a fixed annuity is between 2% and 6%. An indexed annuity credits interest based on the performance of a particular index, such as the S&P 500.

 

Misconceptions About Annuities

You may have heard the saying, “It’s not your father’s annuity,” and that’s because annuity products have changed and evolved significantly throughout the past decade. This has also contributed to an environment full of mixed messages regarding the pros and cons of annuities.

Looking for specific information about a particular product? Have an article you’ve read with information you need help clarifying? Not every annuity is right for every client. To find out what makes sense in your unique financial situation and more about how annuities can positively impact your retirement future, contact The HTR Group team.

Ready to see how annuities can help you reach your financial goals?

Contact us for a Portfolio Review.