It's Never Too Early to Consider a Fixed Annuity

Only 13 percent of workers expect Social Security to be their primary source of income in retirement. Instead, most people are planning to fund retirement through a combination of employer-sponsored plans and personal savings and investments.¹

Increasingly, annuities are playing a critical role in retirement planning. In fact, 44 percent of annuity owners purchased their first annuity before reaching 50 years of age.²

Flexibility
The explanation for the popularity of annuities may lie in their flexibility. In the simplest terms, an annuity is a contract with payments and benefits that can be structured in several ways. Payments can be paid in a lump sum or over time. Payouts can start right away or at a date of your choosing. In the event of your early death, your heirs may be able to collect the amount you paid in, plus any investment gains you locked in during your lifetime.

Contract benefits of a fixed annuity may include a specified income that you'll never outlive, with a guaranteed rate of return.³ With a fixed annuity, you can specify how much income you want in retirement. The accompanying table shows how much an individual would need to contribute to an annuity contract to provide a pre-established monthly income in retirement.

Typically, annuities are funded with after-tax dollars, but that money can come from practically any source, including other investments or an inheritance. Funds accumulate tax deferred, and generally only the earnings are taxed upon withdrawal. If you withdraw funds before reaching age 59½, you may be subject to an additional 10 percent federal income tax penalty. Nonqualified annuity contracts often have no federal contribution limits, and you don't have to take withdrawals at age 70½.

A fixed annuity can help many people address their retirement planning needs. Please call if you want to review your retirement strategy.

1) 2003 Retirement Confidence Survey, Employee Benefit Research Institute
2) Annuity Fact Book, 2003, National Association for Variable Annuities
3) The guarantees of fixed annuity contracts are contingent on the claims-paying ability of the issuing insurance company. Most annuities have surrender charges that are assessed during the early years of the contract. Withdrawals of annuity earnings are taxed as ordinary income.

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