Growth, safety and guaranteed income is not too good to be true

Saving for retirement can be a real challenge today. “Safe” money options like bonds and CDs are paying pitifully low returns, with interest rates that don’t even meet, much less beat, inflation. So, in order to grow your money, you will typically have to take on more risk – but relying on equities could also lead to significant losses … along with many sleepless nights.

But what if there’s a way to combine both growth and safety into the same financial vehicle – one that would also provide you with an ongoing stream of income in retirement, regardless of how long you may need it?

Well, there is. You can easily accomplish this using a fixed index annuity.

Can you really combine safety and market-linked growth in one financial tool?

Fixed index annuities attain their return by tracking an underlying market index, such as the S&P 500. These types of annuities will also typically offer a “fixed” account where you can place a portion of your money to receive a set amount of interest.

When the index that is being tracked has an up year, the fixed index annuity is credited with a positive return (usually up to a set “cap,” or maximum). But, in years when the index performs poorly, your annuity is not hit with a loss. Rather, it is simply given a 0% return for that period. This allows you to continue building upon previous gains, without having to make up for any losses along the way.

In addition, the funds that are inside of an annuity are allowed to grow on a tax-deferred basis. This means that none of the gain will be taxed until the time of withdrawal. So, in essence, your annuity account is earning interest on the principal, interest on the gains, and interest on the money that would have otherwise been paid out in the form of short-term capital gains taxes.

How long will your annuity income last?

When the time comes for you to convert the annuity over to an income stream, there are usually several options available to you, such as:

• Period Certain – With the period certain income option, the annuity will pay out for a set number of years, such as 10, 20, or even 30. If the annuitant (income recipient) passes away during that period of time, the remainder of the payments will be made to a named beneficiary.
• Lifetime Income – The lifetime income option provides a guaranteed payout for the remainder of your lifetime, regardless of how long that may be. That means that you won’t have to worry about running out of income, even if you live a nice long life.
• Lifetime Income with Period Certain – The lifetime income with period certain alternative will provide income for life, but if the annuitant dies within a set time period, such as ten years, the remaining payments will be made to the beneficiary until the chosen time frame has elapsed.
• Joint and Survivor Income – If you have a spouse or partner, the joint and survivor income option can be a viable choice. That’s because income will continue from the annuity for the remainder of both your and their lives.

Can you customize an annuity for your specific needs?

Today, there are many different types of annuities available in the financial marketplace – and no two are exactly the same. That’s why it’s essential that you work with an experienced advisor before you make a commitment to an annuity.

Letting your advisor know your objectives can allow you to “customize” an annuity to fit your particular needs. This can also be accomplished by adding various riders to the annuity. These may guarantee a specified growth rate or allow you to access funds penalty-free if you are diagnosed with a terminal illness or require long-term care. Optional annuity riders will usually require an added annual fee.

What happens if you need your money in case of an emergency?

As with many other financial products, most fixed index annuities will charge a fee if you withdraw most (or all) of your money, or if you “surrender” the annuity, within a certain period of time.

In many cases, the annuity holder is allowed to withdraw up to 10% of the contract’s value without incurring a penalty. The amount of the surrender charge will typically reduce over time, until it disappears altogether.

Annuity surrender charge example

Year	Charge %
Year1	Charge %8%
Year2	Charge %8%
Year3	Charge %7%
Year4	Charge %6%
Year5	Charge %5%
Year6	Charge %4%
Year7	Charge %3%
Year8	Charge %2%
Year9+	Charge %0%

In many cases, the annuity holder is allowed to withdraw up to 10% of the contract’s value without incurring a penalty. The amount of the surrender charge will typically reduce over time, until it disappears altogether.

How can you secure growth, safety and a future retirement income stream now?

If you’re ready to take advantage of tax-deferred, index-linked growth – without having to worry about losses in a downward moving market – a fixed index annuity may be a good option for you, especially if you are also seeking a reliable, ongoing stream of income in retirement.

Alliance America can help

Alliance America is an insurance and financial services company. Our financial planners and retirement income certified professionals can assist you in maximizing your retirement resources and help you to achieve your future goals. We have access to an array of products and services, all focused on helping you enjoy the retirement lifestyle you want and deserve. You can request a no-cost, no-obligation consultation by calling (833) 219-6884 today.