What is an Annuity?

In its simplest form an annuity is typically a contract with an insurance company designed to safely provide you with an income stream. It can be for your future retirement or an immediate net gain. Fixed and indexed annuities accrue income without any risks to your principal. While variable annuities will have possibility of a loss and decline below the initial amount deposited or funded when the market or index the variable annuity is tied to drops. 

We  recommend learning about the basics of annuities and their different uses through watching our videos  found at the Virtual Advisor Group YouTube channel.

Our videos can help give you a good grasp of annuities and how they are designed and utilized differently for different needs in retirement .  How they can be used to create a very successful retirement plan through different techniques and the reasons they are used if taxes or an income loss are a looming concern coming into your retirement.  

​

​In today's world when people are living longer and facing a real risk of running out of money annuities provide very beneficial solutions to running out of income. Annuities can provide you with a lifetime stream of income prolonging and contributing to your life's savings. This is the strongest benefit to many having a guaranteed monthly income that cannot be outlived. Annuities can be a significant part of your income planning strategy in retirement. Many times stock markets fluctuate too much with significant drops due to electronic trading and world events beyond everyones control nowadays. Annuities can provide enough of an income stream to meet the needs of retirees who are living longer. This is why annuities are recommended as an asset for retirement during a planning or retirement strategy session.

Depending what type of annuity you choose it can provide you with a regular fixed income for a lifetime or a specific number of years. There are two main classes of annuities available: deferred annuities and immediate annuities for most considering retirement. For either type there are fixed rate annuities that guarantee a certain rate on your contribution and variable rate annuities that can offer more income options. The right annuity for you depends on your specific needs. Finding the right solution is quite easy with us here at the Virtual Advisor Group, we only offer A+ rated annuity providers and go over your needs with a thorough planning process to ensure we find the best suited annuity for your needs.

Deferred vs. Immediate Annuities

A deferred annuity is a type of personal retirement account that allows you to grow your assets on a tax-deferred basis for long-term goals, like retirement. There are two phases to a deferred annuity: the saving and investing phase, when your assets are invested for potential growth, and the retirement income phase, when you can choose how and when to receive income. 
Immediate annuities are annuity contracts that start the payout stage immediately after the owner purchases the contract. An immediate annuity does not actually go through an accumulation stage because of this immediate payout feature. Each payment that is made from an immediate annuity is a return of part of the investor's original investment and interest that is earned during the payout period. 

Difference between Deferred and Immediate (S.P.I.A.) Annuities

The key difference is that a deferred annuity is a long-term vehicle, designed to accumulate assets over time. When you are ready to receive income, usually at retirement, you can convert your savings to a steady stream of income that meets your needs. Immediate annuities are designed to begin making annuity payments right away or within a short time afterward. In addition, deferred annuities may be purchased with a lump sum or multiple contributions. An immediate annuity is usually purchased with a single lump sum contribution. 

Fixed vs. Variable Rate Annuities

The interest your investment earns can be based on a fixed rate or a variable rate based on stocks, bonds and money market performance. There are benefits and risks associated with each, so make sure you understand your options. Annuities are often downplayed or simply glossed over by many adviser's who are simply trying to sell you a different type of financial product, stocks, bonds, ETFs and more. The only product in the marketplace guaranteed not to lose you money is an annuity either Fixed or Indexed or a hybrid of either. Every other option leaves your money at risk. 

​

Often times annuities are used for retirement purposes or to guarantee long term income. Annuities come in a wide variety of choices to help accomplish different retirement or financial planning goals depending on the stage of life where you may be and where you would like to be.

What you may decide to do with your retirement savings,  will likely be one of the most important financial decisions you ever make.  We are here to help everyone arrive at the best possible decision relative to their particular situation.

 

An annuity can provide you with guaranteed monthly income that you can’t outlive. It can provide you with guaranteed monthly income that’s protected and can last for as long as you live. The guaranteed lifetime income from an annuity can be used to supplement your other sources of retirement income, such as income from your savings, investments and Social Security. There are actually many more annuity choices available to you here than listed on our website. Request information from us below. We offer more here when you do talk with our annuity specialists than a company or agent offering half a dozen or so.

​

Annuities can be customized to the time period you need and offer multiple benefits through different riders ( additional features) that will be discussed when the contract is proposed. The key to success is to find an agent that can clearly explain the many benefits and weaknesses of the annuities available (specifically what they were designed to do or not to do). 

We  also offer numerous specialty annuity products which may pay for your Medicare expenses or possibly give you a much higher rate through purchasing a secondary annuity that recently came on market.

Secondary market annuities are annuities which were previously contracted through a court settlement or lottery winnings and people will take a significantly smaller amount for the cash payout immediately by selling it to someone who will provide them the single lump sum instead of the promised payments over time. Email us to learn more about our options and what may offer the best options towards your goals.

​

Fixed annuities are just one class of annuity products. These are the simplest form typically offering a set amount in an agreed to period of time between you and the annuity carrier or issuer. They have the ability to be customized in a wide variety of time lengths but also offer certain guarantees. These guarantees will vary slightly between certain carriers along with the rates of return available to you, The three major or most common annuity products are fixed, indexed and variable.  Investors looking for a tax-deferred investment with a fixed rate of return will find fixed annuities safer and much more rewarding than a lower yielding rate of return such as a bank's Certificate Of Deposit.

Fixed Annuity features

1. Fixed rate of return, regardless of market volatility 3- to 9-year initial rate guarantee, but can vary greatly depending on the issuer

Tax-deferred investment growth

No IRS contribution limits, 

At the end of the rate guarantee period, your options may include:

• Renewing or exchanging your annuity.

• Moving the assets to an IRA (for pre-tax dollars only).

• Using the assets to generate an income stream.

Indexed annuities are another class of annuity products.  Investors looking for a tax-deferred investment with a fixed rate of return will find fixed annuities safer and much more rewarding than a banks Certificate Of Deposit.

Key Fixed Annuity features

1. Indexed annuity products can offer a return that is tied to the rise and fall of an index such as the Standard & Poor's top 50 stocks or the small cap index, gains can also be locked in regardless of market volatility.

Tax-deferred investment growth, No IRS contribution limits, At the end of the rate guarantee period, your options may include:

• Renewing or exchanging your annuity.

• Moving the assets to an IRA (for pre-tax dollars only).

• Using the assets to generate an income stream.

​

Variable annuities are the most controversial class of annuities with the most moving parts. A variable annuity is quite a bit different than a fixed or indexed annuity since it can present a possibility to lose the principal amount you may have funded initially. That said it also offers tax-deferred retirement savings over an extended period. You fund your account by making one or more deposits. Unlike a fixed annuity, a variable annuity may purchase stocks and mutual funds with your deposits. This increases the possible yield for the annuity, but it also increases your risk.

We are not here to sell different types of investments for your retirement , we are simply here trying to provide you with a clearer understanding of the many types of investment and retirement opportunities available to you so feel free to reach out if you have a question or would like a personalized consultation.