Annuities

Annuities have long been used as private pensions by investors and are considered a retirement investment by the IRS.  An annuity is a contract sold by an insurance company with certain written guarantees to the investor owner.  It is important to note that there are two types of annuities available for investors – immediate and deferred. 

An immediate annuity offers an immediate payout for some guaranteed period of time – lifetime or some fixed amount of time.  The payout amount varies depending on the amount invested, investor’s age as well as current interest rates. 

A deferred annuity defers the payout allowing the annuity to grow tax deferred until a payout option is elected at some future date.  The two types of deferred annuities are fixed and variable.  While similar in that they are both annuities, the difference is in the underlying investment strategy.  Fixed annuities are not invested in the market and cannot lose value in a down market.  Variable annuities are invested in the market and subject to market volatility and principal loss.

Annuities are complex investments and investors should understand the benefits, risk and cost of using an annuity in a retirement plan before investing. 

To learn more about annuities or to schedule a complimentary no obligation consultation, please call Leonard Financial Group toll-free at 1.877.571.7526.

 

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