Annuities are a great way to plan for your retirement years. To keep things simple, Annuities are tools where you can invest a lump sum, or periodic deposits, to receive future income back from the insurance carrier. To further your understanding, Social Security is essentially an Annuity. There are many different types of the Annuities, however, the most common are: Variable, Immediate, Fixed, and Fixed Index.
Most Common Types of Annuities
Variable Annuity
With a Variable Annuity, you choose investments and earn returns based on how those investments perform. You can choose investments that offer different levels of risk and potential growth, depending on your investment goals and tolerance for risk. However, some Variable Annuities do not protect your principal.
Immediate Annuity
Immediate will take your lump sum deposit, and instantly start paying payments back to you. Typically, these will be monthly checks, and you determine how may years to receive payments. Typically, Immediate Annuities are used to convert retirement accounts into instant income.
Fixed Annuity
Fixed Annuities, the principal investment, and earnings are both guaranteed and fixed payments are made for the term of the contract.
Fixed Index Annuity
Index Annuities, this special class of annuities yields returns on contributions based on a specified equity-based index, such as the S&P 500. These are the newest form of Annuities, and your principal investment is guaranteed.
Frequently Asked Questions About Annuities
This will depend on your age, financial situation, risk tolerance, and time horizon. We recommend you set an appointment with a licensed professional to help find a solution right for you.