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Financial Planning

Investing in a properly structured annuity, can be a fruitful investment tool, which can help you take control of your financial future, and ensure you have a promising and successful retirement. With a properly designed annuity, you can prepare for your retirement years, and ensure you never run out of money. Annuities can be structured in a way that can ensure you never lose a dime in principle, and still have guaranteed growth according to stock market performance. You can even structure your annuity to offer a guaranteed income for as long as you need it. Annuities can ensure growth without taking any market risks, and if properly structured, annuities can have zero market risks, and can even offer guaranteed growth. Annuities grow in a tax deferred status, which means you can entirely take full advantage of compounding interest. Annuities are designed to offer safety and security for your investment, and are insured by the State Guarantee Association. Investing in an annuity is a great way to secure a financial future, and ensure you never run out of money in your retirement years.

Annuity Income

Annuities can offer a guaranteed income for a specified period. This period can last as long as you choose, and can even last for the rest of your life. Annuities can be a second Social Security check that can pay you for the rest of your life, and can even be passed on to a spouse or loved one. Depending on the type of annuity purchased, and the annuity structure you choose, you can ensure a guaranteed income payment for the period you choose. This income payment period can last for a specified amount of time, or can be structured to last for the rest of your lifetime. Depending on the annuity structure, this income can potentially be passed on to a spouse or loved one as well. In addition, most annuity structures allow for any remaining funds after death, to be passed on to a beneficiary. This ensures that there is never a loss in principle for the annuity consumer.

Annuity Growth without Risk

Fixed Indexed Annuities are a tool that helps grow your money without any market risk. This is because your funds are not invested directly in the stock market, but instead are invested in an index that bases growth according to the growth of an index. You can choose which index fund(s) you want to invest your annuity assets within. The index reflects growth based on the stock market stocks that the index is invested within, and will grow according to how the funds in the index grow, according to market gains. This is done as more of a reflection to the performance of the stock market, and does not have any loss potential, as the funds are not invested inside the stock market itself, but are instead within an index fund, which will mirror the gains of the stock market’s performance. This means that you will never lose your principal or interest accumulation. If your money has grown, it will never go below the amount it has grown to. This accumulation happens according to the investment strategy chosen and the success of the index fund(s) you choose to invest in.

Annuity Safety and Security

Annuity insurance companies are required to be part of the State Guarantee Association. This state sanctioned non-profit organization, is a fund that is created in each state, and has a requirement for insurance companies offering financial products in that state to join. The insurance organizations required to join the association include companies that offer products such as annuity policies, life insurance policies, long term care policies, and disability income policies. This association is funded by all the insurance companies offering these types of products within the state. The association is put in place in each state to create a fund, just in case an insurance company becomes insolvent. This is rare in general, as what would typically happen if an insurance company was having financial trouble, is a different insurance company would typically purchase the insolvent company’s contracts. The state guarantee association is a back up that works similar to FDIC insurance, but on a state level, to ensure the contract holder (the insured) does not lose their insurance product, in the event an insurance company becomes insolvent.

Annuities and Taxes

Annuities grow in a tax deferred status. This means that you will only have to pay taxes when you withdraw your funds from the annuity. This structure helps with investment growth, as you are able to grow your principle and interest without reducing growth based on taxes that you might owe. This differs from other investments such as bank CD’s or other non-tax deferred type accounts, since you don’t have to take accumulated interest out from your interest payments, to pay the taxes that would be owed in these other types of accounts. This will help with faster growth of the annuity investment account, and ensures you can take full advantage of compounding interest.

Annuities and Compounding Interest

Annuities grow according to your principle, but will also grow based on your interest accumulation. This is referred to as compound interest. Albert Einstein described compound interest as the “eighth wonder of the world”. What does this mean for your investment? This means that if you put in your investment principle, and it accumulates interest, the next year your principle will be as much as your total principle and accumulated interest. These accumulations take place year after year, and while invested in an annuity, take place at a tax deferred status, which means that there is no limit to the potential growth of your investment.

Annuity Bullet Points

Investing in an annuity has many benefits that can include:

  • Unlimited growth potential
  • Safety and security knowing there is no loss potential, as annuity investments are backed by the State Guarantee fund, which has a similar correlation to FDIC insurance.
  • No loss in principle and accumulated growth
  • Guaranteed growth when structured correctly
  • Guaranteed income for the specified term, which can potentially last a lifetime.
  • Tax deferred growth
  • Compounding interest to the max
    For more information about investing in an annuity, please contact us today! We want our customers to have all the knowledge and resources they need to make informed financial decisions.