Fixed Annuities are CD-like investments issued by insurance companies and guaranteed by the claims paying ability of that financial institution. Fixed annuities pay guaranteed rates of interest that are set by the insurance company and are usually more competitive rates of return than bank CDs.

This type of annuity can be either deferred or immediate. Deferred refers to the fact that the owner of the annuity would accumulate the set rate of interest until a payment option is elected. An immediate annuity makes fixed payments that begin, yes you guessed it –immediately. In both contracts, payments options are chosen by the owner of the contract and can last for a lifetime.

A guaranteed payout option makes a fixed annuity a popular retirement vehicle for those who desire a pension like income.

Fixed Index Annuities are another member of the annuity family and also the fastest growing in terms of popularity. Like a fixed annuity and a bank CD, you have financial peace of mind knowing that your money is protected. These programs are not susceptible to market fluctuations and are designed to offer a more competitive rate than bank CD’s and fixed annuities.

This type of annuity allows the contract owner to link the performance (interest rate) of the contract to an index such as the S&P500 on an external basis, meaning the underlying investment is not directly invested in the stock market.

Money is available to the contract’s annuitant immediately and without a penalty or withdrawal charge. The safety, liquidity, and potential for competitive gains have caused fixed index annuity sales to pass the $30 Billion in 2010. 

Income Planning – Converting Wealth to Income

Throughout your working years, you’ve received a paycheck on a regular basis- and of an amount with which you were probably familiar. The accumulation period is now over and you have converted your 401(k) and other retirement plans into your IRA. Now what? How can you ensure that your money will last as long as you do? As a retiree with a set amount of money, how much can you truly afford to lose? Any at all?

It is time to acknowledge the preservation stage (Stage 2) of money. This is the time period in which you structure your investments in a way that your money will last as long as you do and on a guaranteed basis.

At CBU, we will introduce you to the different investment options you have to generate income. In addition we will create strategies for distributing your income and do so in a manner that is efficient as possible with respect to timing and taxes. Contact us today with questions or for a free consultation.