Is a Fixed Indexed Annuity Right for You?
David Novak
David Novak
Feb 14, 2015
3 min read
405
| Are nearing retirement or are retired (age 55+) | You may be interested in adding to your retirement nest egg. |
| Are looking for guarantees | You may like the issuing insurance company’s guarantees of stability of principal and interest. |
| Are averse to risk | You may like the conservative features of a Fixed Annuity (stability of principal, interest guarantee, annuitization, etc.). |
| Are concerned about taxes | Fixed Annuity earnings are not taxed until withdrawal or surrender. |
| Want a fixed return on your money | Fixed Annuities carry a known interest rate, which is reset periodically (annually or other selected guarantee period). |
| Reinvest interest, dividends or capital gains | Income from your portfolio is not needed for your living expenses. |
| Want emergency access to your money | A certain percentage of the premium or account balance of a Fixed Annuity is typically available free from surrender charges.* |
| Wish to minimize estate administration headaches for your loved ones | Named beneficiaries on a fixed annuity contract receive death proceeds without the expense and delay of probate. |
| Want a regular source of income | Annuitization offers you lifetime income or other income choices. |
| Already have a Fixed Annuity | You are already comfortable with the Annuity product in general and may want another one. |
* Withdrawals of earnings are taxed as ordinary income and, if taken prior to age 591⁄2, may be subject to an additional 10% federal tax penalty. Most annuities have surrender charges in the early years of the contract. Other insurance company costs are taken into account when setting the fixed annuity’s interest rate.
Is An Annuity Right For Me?
| Your Investment Goal | Is an Annuity Right? |
|---|---|
| I need guaranteed income | Yes |
| I want to guarantee my principle and interest-earned against any loss | Yes |
| Leaving money to my heirs is important | Yes |
| I want to share in the gains of the stock market | Yes |
| I want tax deferred growth | Yes |
| I only want to make a short term investment | No |
| I have time to let my interest compound and grow | Yes |
| I need immediate monthly income from my investment | Yes |
| I want to avoid the risk of the stock market | Yes |
| I need immediate liquidity to more than 10% of my balance per year | No |
| I want to use this money before I'm 59.5 years old | No |
| I need an interest rate better than a bank saving account | Yes |
| I'm looking for a high risk for high return product | No |
