Annuities
If you’ve ever worried about outliving your retirement savings, you’re not alone.
A recent study found that most Americans are worried about their financial security in retirement. On average, 79% of Americans believe there is a nationwide retirement crisis, up from 67% in 2020. They also believe that workers, due to a reduction in pensions, are unable to save enough on their own to guarantee a secure retirement.1
With pension offerings on the decline, you may want to consider a fixed-income component in your financial strategy. In short, adding an annuity may be an opportunity to help ensure a portion of your retirement income will be guaranteed.
What is an annuity?
An annuity is a contract you purchase from an insurance company. For the premium you pay, you receive certain fixed and/or variable interest crediting options able to compound tax deferred until withdrawn. When you are ready to receive income distributions, this vehicle offers a variety of guaranteed payout options — some even for life.
Most annuities have provisions that allow you to withdraw a percentage of the value of the contract each year up to a certain limit. However, withdrawals will reduce the contract value and the value of any protected benefits. Excess withdrawals above the restricted limit typically incur “surrender charges” within the first five to 15 years of the contract. Because annuities are designed as long-term retirement income vehicles, withdrawals made before age 59 ½ are subject to a 10% penalty fee, and all withdrawals may be subject to income taxes.
1National Institute on Retirement Security. "Retirement Insecurity 2024: Americans' Views of Retirement." February 2024. https://www.nirsonline.org/reports/retirementinsecurity2024/. Accessed Aug. 2, 2024.
Insurance products are offered through the insurance business Flora & DiPaula Wealth Partners, Inc. Flora & DiPaula Wealth Partners, Inc. is also an Investment Advisory practice that offers products and services through AE Wealth Management, LLC (AEWM), a Registered Investment Advisor. AEWM does not offer insurance products. The insurance products offered by Flora & DiPaula Wealth Partners, Inc. are not subject to investment Advisor requirements.
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