June is National Annuity Awareness Month

June is National Annuity Awareness Month

Submitted by Mike Kelley on

First off, I hope everyone is having an incredible month so far. The weather is beginning to warm up, perfect for getting outside and enjoying the natural beauty your state has to offer!

As mentioned in the title, this month is National Annuity Awareness month. As a top producing FMO our job is not only to work with you to achieve the financial security you need but also to educate. At CBU we believe that you can never have enough tools in your toolbox so we continue to add new strategies and knowledge to yours.

Many people struggle deciding whether to use a fixed annuity, fixed indexed annuity, or a variable annuity to achieve what they want. The reason is that many descriptions of the three use confusing financial jargon that is hard for non-finance professionals to understand. We decided to simplify things for you. Listed below are the main differences between the three financial solutions.

Fixed Annuity
• Set interest rate
• Fixed interest rate for the first year then the insurance company has the right to change it on a yearly basis
• Taxes are deferred until withdrawal
• A Fixed Annuity comes with a guarantee that you will not lose your principal unless the insurance company fails
• Over age 59½? You can make annual withdrawals of up to 10% of the account’s value every year with no penalty
• Withdrawing more results in a surrender charge

Fixed Indexed Annuity
• Taxes deferred until withdrawal
• Your principle is not subject to market index risk
• A downturn in the market will not affect the contract value
• You are guaranteed at least the minimum interest rate of return or a higher interest rate if your chosen index such as the S&P 500 does better

Variable Annuity
• Fluctuating interest rate
• Value of the annuity depends on the investment options you have chosen
• Taxes are deferred
• Unlike fixed annuities, your account is always at risk because it is tied to other financial products
• Variable annuities have the option to have living benefits

Have no fear! Everyone’s situation is different! Just make sure you know what you are getting into before you start. Stay educated. An annuity can be the perfect tool to add to your retirement toolbox!
Ask your advisor today which is right for you!

Allianz. "Understanding the Basics." Understanding Fixed Indexed Annuties (n.d.): 4. Print.
Journal Article

"Fixed vs. Variable Annuities." Monica J. BUSCH INVESTMENTS. N.p., n.d. Web. 09 June 2016.