Indexed Annuity

An Index Annuity is an insurance product that can provide tax deferred growth for retirement. Index annuities can also guarantee a specific amount of income in retirement for as long as you live utilizing the Annuitization option of your annuity. What we prefer to do is utilize a Life-Time Income Rider which could give you more control over your income and the amount of income you may receive.

Fixed Annuities by their very nature are considered a conservative alternative to other investments that bear more market risk. We believe that an Index Annuity can provide a reasonable rate of return while preserving your retirement savings. Fixed and Index Annuities still have their risks, though. You may not lose your principal during tough market conditions while investing in a Index Annuity or Fixed Annuity, but your principal could erode over time due to high inflation and early termination of your annuity.

At Tradewell Tax & Financial we take things slow. We focus on getting to know you and your long-term income needs and retirement goals. If an Annuity is suitable, we then, together, seek the very best product to meet those goals. We believe in many instances that our clients are more concerned with and never go backwards with their savings.

Here are some possible benefits of an Index Annuity:

  • Tax Deferral
  • Liquidity
  • Possible Probate avoidance
  • Guarantee Lifetime Income*
  • Preservation of your principal due to stock market volitiality
  • Minimum Guarantee Interest Rate (MGIR) is the lowest your annuity could earn*
  • The ability to perform over the stated MGIR with interest earnings that are based upon the growth in an accepted index, such as the S&P 500

Most annuity companies allow penalty-free withdrawals on an annual basis from your annuity contract. Typically these amounts range from 5-10% per annum. With these restrictions, sometimes it may not be suitable to put a substantial percentage of your retirement into an Index Annuity, if any at all. All annuity companies have different restrictions and benefits as it relates to withdrawal options. We want to make sure that whichever annuity you choose, will meet your liquidity goals well into the future.

Certain riders that may be available in a Index Annuity could increase this liquidity in the event of a confinement to a nursing home or diagnosed with a terminal illness.**

Annuities are best suited for long term investors. Any strategy utilizing investments carries an inherent element of risk. Withdrawals from an annuity prior to age 59 1/2 are subject to a 10% tax penalty in addition to income taxes on earnings.

 

*Guarantees are based upon the claims paying ability of the underlying insurance agency.
**Riders are available as an addition to a purchase of an annuity contract, however, there are additional costs associates with the addition of a rider.