Annuities Made Easy

Annuities are extraordinarily popular today, but they’re not new.

In fact, annuities trace their origins back to Roman times. Citizens would make a one-time payment as an “annual stipend” to the emperor in exchange for lifetime payments made once a year. During the 17th century, European governments created annuities to pay for many of the wars with neighboring countries.

Today, the uses of annuities are more peaceful – and more complex.  Understanding annuities, however, can be made easier with a quick review of their essential features and benefits.

What are annuities?

An annuity is a financial product issued by an insurance company. It allows tax-deferred growth of assets. At retirement, an annuity can help to provide a guaranteed income stream for one or more people, in specified amounts, for a specified period – or for life.

In today’s retirement planning context, annuities let you match up investment, income and legacy options with your retirement goals.

Benefits can include:
• Tax-deferred growth
• Guaranteed income1 for life
• Professionally managed investment options
• Protection for your beneficiaries


The power of tax-deferred growth

If you could increase the return on your investment without taking on any more risk, would you? That´s exactly what happens when you invest in accounts that defer tax withholding until the time of withdrawal. Without tax deferral, assets grow more slowly.  For example, when you pay taxes at the rate of 25% on your annual gains, it reduces the amount of your money that could be earning valuable compounding interest.

As the chart below shows, over the 20-year period, a $100,000 investment, earning 4% tax-deferred returns, will grow to $219,112 over 20 years. That´s nearly $39,000 more in earnings.

Who’s right for annuities?

An annuity could be a good choice if you want to:
• Increase your tax-deferred earnings, and may be already taking full advantage of all available 401(k), IRA or other tax-deferred plans
• Receive guaranteed income1 for life or a set period of time
• Create a plan with flexible investment, income and legacy choices


Fixed annuity

Fixed annuities are retirement contracts built on protection and guaranteed returns, including a guaranteed minimum interest rate. They offer guaranteed retirement income for a set period and, depending on the product chosen, may provide guaranteed return of initial investment at anytime and provide death benefit protection.

Index annuity

Index annuities combine the benefits of a traditional fixed annuity, including guaranteed minimum interest, with the potential to earn additional interest linked to the return of a market index. In addition to the benefits of a fixed annuity, owners have the flexibility to build their plan to meet individual needs.

Immediate annuity

Often, fixed annuities are deferred. Immediate annuities, however, are a popular choice for people already in retirement because it guarantees lifetime income with a single lump-sum payment. Contract owners can choose to receive income payments for life, or a shorter period of time. Payments are based on a fixed interest rate and can be paid out monthly, quarterly, and yearly.

Hybrid annuity

Hybrid annuities combine the advantages of fixed annuities, fixed index annuities and immediate annuities. The hybrid also shares some of the features of a variable annuity as well. In addition to the benefits of the other annuities, the hybrid provides more flexibility to start, and also stop the flow of monthly income. Hybrids also provide liquidity that could be used for income and cash flow in retirement.

Variable annuity

Variable annuities offer a range of investment choices through sub-accounts that include stocks, bonds (or a blend of the two) and fixed account options. The withdrawals you eventually make from your variable annuity contract will be based on the value of the underlying investment choices you select.  In addition to investment choices, variable annuities typically provide optional benefits for an additional charge. These can include: guaranteed minimum income even if stock markets decline, the ability to increase your retirement income by potentially locking in market gains and enhanced benefits for beneficiaries.

Variable annuities involve investment risks and may lose value. An annuity is a long-term, tax-deferred investment designed for retirement. Earnings are taxable as ordinary income when distributed and, if withdrawn before age 59½, may be subject to a 10% federal tax penalty. Annuities may not be suitable for some investors; they have early surrender charges and may limit yearly distributions to 10% of the contract value.

Let experience be your guide

If you are saving for retirement, but not taking advantage of tax-deferred investing, it could have a dramatic impact on your future. Consider consulting with an experienced representative today on how tax deferral can positively affect the growth of your retirement assets.

About Mike Albertson

The Founder and CEO of Tradewell Tax & Financial, Mike is also a fee-based Investment Advisor Representative and Fiduciary who is required to put his clients’ interests before his own. In 2002 Mike entered into the financial services sector as a way to learn about people and help them.

Since those early days his practice has grown into one of the Fort Wayne region’s best investment management firms.  Applying his unique quarterbacking approach to traditional planning and investment management, Mike supervises a full-time team of attorneys, Enrolled Agent, tax advisors, and insurance professionals.


Mike Albertson is an Investment Adviser Representative. Advisory services offered through Secure Asset Management, LLC (SAM) a Registered Investment Adviser.

Wes Phelps is an Investment Adviser Representative. Advisory services offered through Secure Asset Management, LLC (SAM) a Registered Investment Adviser.

Tradewell Tax and Financial is not affiliated with Secure Asset Management

Representatives of Tradewell Tax and Financial are authorized in states where they are properly registered. Mike Albertson: AZ, FL, IN, KS, KY, ME, MI, MN, NC, OH, SC, TX. Clients who are not residents of these states cannot be serviced.

This website is not intended to provide investment, legal, or tax advice, nor to effect securities transactions or to render personal advice for compensation. Tradewell Tax & Financial is not engaged in the practice of law.

All insurance recommendations will be provided by a state licensed Tradewell Tax & Financial insurance agent.

There are no assurances that you will achieve your investment objectives. All investment strategies have the potential for profit or loss. Changes in investment strategies, economic conditions, contributions, or withdrawals may materially alter the performance of your portfolio. Past performance is no guarantee of future success. We provide no guarantee that any portfolio will match or outperform any benchmark.

Recommendations and advice are based on information provided by the client that is presumed to be accurate. The financial planning process is not stagnant and must be adjusted based upon changes in the client's personal and financial situation, liquidity needs, investment objectives, and risk tolerance. Clients are responsible for notifying us immediately if their personal and financial circumstances or goals change.