Guarantee Your Retirement Income With an Annuity

Annuities can be very flexible and safe ways to save for retirement.  Because it is an insurance product, it has guaranteed returns.  Annuities may not be a replacement for a 401(k) or other market-driven investment vehicle, but they can be a great addition to traditional investments.  If you want to avoid market fluctuations altogether or diversify to prepare for market fluctuations, an annuity may be for you.  Phillips Stafford Insurance Group represents more than 15 annuity providers. We can find the right company and annuity for your specific goals.

Phillips Stafford Insurance Group offers the three most common types of annuities

Fixed Annuities

A fixed annuity offers a guaranteed rate of return that is set at the inception of the annuity contract.  Contributions to the annuity can be made in increments or lump sums.  The money grows at the guaranteed rate until the annuitization phase, when the funds are paid out to the contract owner.  Because the rate of return is guaranteed, the annuity isn’t subject to market fluctuations.  It is a very secure and predictable way to save for retirement.

Some key benefits of fixed annuities:

  • Variety of surrender periods from as little as three years
  • Issue ages up to 90 years old
  • Guaranteed rate of return with tax deferral
  • Liquidity and income options
Annuity

Indexed Annuities

An indexed annuity offers the safety and security of a fixed annuity while also giving you the opportunity to share in the market upswings.  An indexed annuity bases its returns on a particular financial index. For example, an indexed annuity might be directly tied to the S&P 500 or the Dow Jones. If the S&P 500 increases in value, the indexed annuity will also increase in value.

Although you are exposing yourself to the stock market with this type of investment, you will not be fully exposed. Most of these annuities will have a minimum that you will earn regardless of what the stock market does. This provides you with some level of safety even though you are attempting to benefit from movements in the stock market.  Depending on the company issuing the annuity, there may also be caps on the gains in good years.  Like a fixed annuity, contributions can be made in lump sums or as monthly payments.

Some key benefits of indexed annuities

  • Capture tax deferred gains tied to market indexes
  • Downside protection from market losses
  • Income riders that cost less than a Variable Annuity
  • No internal cost like that of a traditional Variable Annuity
  • A variety of surrender periods to fit your schedules
  • Liquidity options

 

Immediate Annuities

An immediate annuity, also called a Single Premium Immediate Annuity, or SPIA, offers instant cash payments based on a lump sum payment.  While other types of annuities have an accumulation phase where money is periodically added to the policy, a SPIA skips that phase.  SPIAs are great tools to turn an inheritance, pension fund, life insurance proceed, or any other lump sum of money into a guaranteed income stream for as long as you chose.

Some key benefits of immediate annuities

  • Guaranteed lifetime income option
  • Variety of payment options
  • Spousal survivor income option
  • Impaired risk SPIA’s for increased payout

 

Payout Options

Most annuities have two phases, the accumulation phase and the annuitization phase.  The only exception is a SPIA which only has an annuitization phase.  After the money has been added to the annuity, whether by meticulous contributions over the years or a lump sum, you need to decide how the annuity will pay out.  The options can vary from as short as a couple years up to the ability to care for a spouse after you have passed.  The most common options are below.

Life Option

Income For Life

Life Option

The life option typically provides the highest payout because the monthly payment is calculated only on the life of the annuitant. This option provides an income stream for life, which is an effective hedge against outliving your retirement income.

Life with Guaranteed Term

The best of both worlds

Life with Guaranteed Term

Many people like the idea of income for life, but they are afraid to choose that option in case they die in the near future. The life-with-guaranteed-term option gives you an income stream for life, so it pays you for as long as you live. But with this option, you can select a guaranteed period for which your annuity is obligated to pay to your estate or beneficiaries even if you die before that guaranteed period is over.

Period Certain

Guaranteed income for a set time

Period Certain

With this option the value of your annuity is paid out over a defined period of time of your choosing, such as 10, 15 or 20 years. Should you elect a 15-year period certain and die within the first 10 years, the contract is guaranteed to pay your beneficiary for the remaining five years.

Joint-Life Option

Protection for you and your spouse

Joint-Life Option

This common option allows you to continue the retirement income to your spouse upon your death. The monthly payment is lower than that of the life option because the calculation is based on the life expectancy of both the husband and wife.