What Is an Annuity and How Does It Work?

Retirement planning isn't only about accumulating money.

Eventually, you have to answer another question:

How will I turn my savings into income?

An annuity is an insurance contract designed to provide financial benefits according to the terms of the contract and can be structured to provide income payments.

How Does an Annuity Work?

Generally, you provide money to an insurance company through either a lump-sum payment or a series of contributions.

Depending on the type of annuity, the money may accumulate for a period of time before income payments begin, or income may begin relatively soon.

Why Consider an Annuity?

Annuities can potentially help address retirement-income concerns such as:

• Creating a predictable income stream

• Providing lifetime income options

• Deferring taxes on certain growth

• Managing longevity risk

• Creating a retirement-income strategy

But Annuities Are Not One-Size-Fits-All

There are different types of annuities, and they have different features, risks, fees, guarantees, and surrender provisions.

For example, some annuities may have surrender charges if you withdraw money during a specified period.

That's why you shouldn't purchase an annuity simply because someone says it is "safe" or "guaranteed."

You need to understand what is guaranteed, who provides the guarantee, what it costs, and when you can access your money.

Your Retirement Needs a Strategy

The goal isn't to find the "best annuity."

The goal is to determine whether an annuity makes sense for you.

Let's talk about your retirement goals.

Call 619-333-6464

Annuities are long-term insurance contracts. Product features, guarantees, fees, surrender charges, tax treatment, and risks vary by contract. Guarantees are subject to the claims-paying ability of the issuing insurance company.