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Annuities Offer the Peace of Mind, That Most Investments Don't
Whether you're looking for a guaranteed rate of return, market linked growth without the market risk, or a lifetime income stream... annuities can be a great fit within your retirement portfolio.
With thousands of products available, it can be an overwhelming task to find the most appropriate product and plan. Don't be sold, be informed by contacting the Michigan Retirement Agency.
Types of Annuities
Immediate Annuities
An annuity that guarantees an income stream at a specified date, typically within one-year. Many lifetime income options are available that will guarantee the highest possible income but will most likely eliminate or reduce your liquidity. Best income with best carrier, wins!
Fixed Deferred Annuities
An annuity that guarantees a fixed rate of return for a specified duration. e.g. a product that guarantees 3.5% annually for 5-years. Many firms use "teaser" rates, which advertise a higher 1st year rate, to then decrease that rate in subsequent years.
Fixed Deferred Indexed Annuities
An annuity that is designed to generate more growth than a traditional fixed annuity. The interest is credited on a specific index performance, with the principle guaranteed at maturity. These are more complex products in design so clients must be wary of deceptive sales tactics.
Variable Structured Deferred Annuities
An annuity that requires a securities license because they are market driven but can have insurance protections that may provide an enhanced death benefit or lifetime withdrawal rider. Market risk is a concern, but can give better growth opportunity.
Advantages & Disadvantages of Annuities
Like all investments and insurance products, their are pro's and con's, which is why speaking with a guru is imperative in making a sound decision.
Pro's
Con's
Lifetime Income
Potentially high fees
Guaranteed rate of return
Bad sales practices
Tax deferral
Surrender Charges
Downside protection
Limited access to value
Return of Premium option
Taxed at ordinary income
No annual contribution limits
Complex
