If you’ve ever worried about outliving your retirement savings, you’re not alone.
A recent study found that 72 percent of Americans indicated they would be willing to give up smaller pay increases in exchange for steady and reliable income in retirement. In the same study, 77 percent said the disappearance of pensions has made it harder to achieve the American dream.1
With pension offerings on the decline, you may want to consider a fixed income component to your financial strategy. In short, adding an annuity may be an opportunity to help ensure a portion of your retirement income will be guaranteed.
What is an annuity?
An annuity is a contract you purchase from an insurance company. For the premium you pay, you receive certain fixed and/or variable interest crediting options able to compound tax deferred until withdrawn. When you are ready to receive income distributions, this vehicle offers a variety of guaranteed payout options — some even for life.
Most annuities have provisions that allow you to withdraw a percentage of the value of the contract each year up to a certain limit. However, withdrawals will reduce the contract value and the value of any protected benefits. Excess withdrawals above the restricted limit typically incur “surrender charges” within the first five to 15 years of the contract. Because annuities are designed as long-term retirement income vehicles, withdrawals made before age 59 ½ are subject to a 10 percent penalty fee, and all withdrawals may be subject to income taxes.
1National Institute on Retirement Security. February 2017. “Retirement Security 2017: A Roadmap for Policy Makers – Americans’ Views of the Retirement Crisis and Solutionss.” Accessed Jan. 30, 2018.
Insurance and annuity product guarantees are not offered by Global Financial Private Capital LLC. Annuities have limitations. They are long-term vehicles designed for retirement purposes. They are not intended to replace emergency funds, to be used as income for day-to-day expenses, or to fund short-term savings goals. Fixed annuities may be appropriate for individuals who want guaranteed interest rates and the potential for lifetime income. Guarantees are subject to the claims-paying ability of the issuing insurance company. If you take withdrawals before you are age 59 ½ , you may have to pay a 10% early withdrawal federal tax penalty in additional to ordinary income taxes. Withdrawals may trigger early surrender charges, reduce your death benefit and contract value. Not a deposit. Not FDIC or NCUSIF insured. Not guaranteed by the institution. Not insured by any federal government agency. May lose value.
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