News Articles

  • Reaching Retirement Goals

    Posted on March 6, 2012 by IALC

    Indexed annuities have helped Frank and his wife Mary Lou achieve their targets for retirement. They have always been diligent about saving money, and wanted the peace of mind and safety indexed annuities provide. Because of their stable funds, Frank and Mary Lou have been able to travel, provide funding for their grandchildren’s education and donate to causes they are passionate about.

    Frank explains that if he had left a large portion of money in the stock market, he would likely have to be working part-time to support he and his wife to make up for what he would have lost. Hear more of Frank’s story below:

     
  • Fixed Index Annuities (FIA) – What, When, and Why?

    By: Tom Morrow

    Fixed Index Annuities were introduced to provide the same principal protection from market losses enjoyed by all fixed annuity owners. But, here is the kicker...FIAs also gave the annuity owner the potential for higher interest based on the market index used.

    The FIA era began in 1995 when a 60 year old from Massachusetts made a $21,000 premium in a Keyport KeyIndex annuity that grew to $51,779. Not a bad start for FIAs, and did I say something about "Principal Protection."

    The beauty of an annuity is SAFETY. You are guaranteed not to lose your principal, or any interest credited to your account. Like a Fixed Annuity, FIAs also guaranteed a minimum rate of interest. Is it any wonder why, FIAs have grown from just over $100 million the first year to (are you ready)...$210 BILLION at the end of 2010. There was something more than SAFETY going on here!

    Read more... Fixed Index Annuities (FIA) – What, When, and Why?  
  • NAFA

    National Association for Fixed Annuities

    Article By: Kim O'Brien, Executive Director, NAFA

    The investment community has historically used fixed annuities as a stable value component of an integrated investment strategy. Now, two recent innovations within the fixed annuity insurance industry are expanding the role of these products. These innovations provide new opportunities for financial advisors to diversify risk and complement the investment side of an individual's retirement plan with guarantees and insurance.

    Read more... National Association for Fixed Annuities  
  • Fixed Annuities:

    The Missing Piece of Your Retirement Planning Puzzle?

    By Doug Lockwood

    U.S. News MONEY

    Increasingly, the responsibility for funding a comfortable retirement is shifting from the employer and the government to the individual. Many people contribute to employer-sponsored retirement plans and IRAs, but there is another tax-advantaged retirement vehicle that shouldn't be overlooked: annuities.

    Read more... U.S. News & World Report Money  

U.S. News & World Report Money

Fixed Annuities:

The Missing Piece of Your Retirement Planning Puzzle?

By Doug Lockwood

U.S. News MONEY

Increasingly, the responsibility for funding a comfortable retirement is shifting from the employer and the government to the individual. Many people contribute to employer-sponsored retirement plans and IRAs, but there is another tax-advantaged retirement vehicle that shouldn't be overlooked: annuities.

Annuity essentials

An annuity is a contract between an individual and an insurance company. They’re long-term, tax-deferred investment vehicles designed for retirement purposes. In exchange for purchasing an annuity (either through a lump-sum payment or through periodic installments), the buyer receives a regular payment during retirement.

A fixed annuity essentially earns a guaranteed rate of interest for a specific period of time. Likewise, the amount of the benefit paid out at retirement is fixed. This feature can help when planning a budget for your later years because you'll know in advance how much regular income you will receive. However, in exchange for less risk, the fixed annuity buyer gives up the potential for a larger investment return. Conversely, a variable annuity allows the buyer to choose from a variety of investments that will change in value. A variable annuity buyer takes on more investment risk in exchange for greater growth potential.

Increasingly, the responsibility for funding a comfortable retirement is shifting from the employer and the government to the individual. Many people contribute to employer-sponsored retirement plans and IRAs, but there is another tax-advantaged retirement vehicle that shouldn't be overlooked: annuities.

Breaking down fixed annuities

Tax advantages

One advantage to owning a fixed annuity is that you can accumulate money on a tax-deferred basis. This means that the earnings in your annuity are not taxable until you "annuitize," or begin receiving payments—at a time when you may be in a lower tax bracket.

Generous investing guidelines

There are generally no contribution limits on annuities. This can be especially advantageous if you've fallen behind in investing for your later years, or if you're looking to minimize taxes while investing for retirement and have contributed the maximum amounts to other tax-advantaged options. Unlike other retirement vehicles, annuities may allow you to continue contributing even after you've retired and whether you have earned income or not.

Estate planning benefits

If you die prior to receiving money from an annuity, your beneficiary may still receive a death benefit, although he or she will have to pay taxes on the amount.

Fees and penalties

As with other tax-advantaged retirement accounts, you may have to pay a 10 percent IRS penalty if you withdraw money from an annuity prior to age 59 1/2. In addition, you may have to pay a "surrender" charge to the issuing insurance company if you cancel your contract prematurely.

Fixed annuities for retirees

Already retired? You can still purchase a fixed immediate annuity. In exchange for contributing a lump sum to a fixed annuity, you can immediately begin receiving income payments for a specific length of time. This may be beneficial to a retiree in good health who is concerned about outliving assets.

One annuity can be very different from another, and the rules surrounding them are complex. But if steady income and preservation of principal are goals you want to pursue, a fixed annuity may offer advantages worth looking into. Keep in mind that if you are against annuitizing your contract, you may be able to take systematic withdrawals instead, thus avoiding annuitization and keeping full control over your assets.

 

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