Annuities & retirement income

Give your retirement savings a clear job.

An annuity is an insurance contract. Depending on its terms, it may help accumulate funds or provide income now or later. Start with the gap between your expected expenses and income from Social Security, pensions and other resources.

Understand the main choices.

• Fixed annuities: ask about guaranteed interest, the guarantee period and renewal terms.
• Fixed indexed annuities: ask how index-linked interest is calculated, including caps, participation rates and spreads. You are not directly investing in the index.
• Immediate and deferred income annuities: compare when payments begin, how long they last, survivor options and what happens at death.
• Variable annuities: have investment risk and require a separate review of investments, fees and applicable professional qualifications. This explanation is not a statement that LI4W offers every annuity category.

Lifetime income needs a contract review.

Some contracts or optional riders provide lifetime income, subject to their terms. Ask whether the quoted amount is an actual payment, an account value or an income-benefit calculation. These figures are not interchangeable. Guarantees depend on the issuing insurer and contract; optional benefits may have costs and restrictions.

Questions before committing money.

• How much must remain available for emergencies and near-term expenses?
• What surrender charges, withdrawal limits or market-value adjustments apply?
• What fees or rider costs apply?
• How would inflation affect purchasing power?
• What happens to payments and remaining benefits when either spouse dies?
• How would withdrawals affect taxes and other retirement decisions?

An annuity inside an IRA does not add another layer of tax deferral. Review tax treatment with your tax professional. Do not move or surrender existing coverage before reviewing replacement costs and consequences.

LI4W offers annuity conversations with Eric Towns, subject to licensing, carrier appointments and product availability. There is no universal contract for every woman.

Build your retirement income map → · Investor.gov: annuity education