Annuities

An annuity is a financial product sold by insurance companies that pays out income, and is commonly used as part of a retirement strategy. Annuities receive funds from the purchaser, either as a lump sum or through regular payments, which then make payments to the purchaser at a later stage, typically during retirement.

When you purchase an annuity, you make an initial investment, either in one lump sum or through a series of payments. In return, the insurer commits to making periodic payments to you starting immediately or at some future date. These payments can continue for a set number of years or for the rest of your life.

There are primarily three types: fixed, variable, and indexed annuities. Fixed annuities offer guaranteed payouts. Variable annuities provide returns based on the performance of investment options chosen by you. Indexed annuities offer returns tied to a stock index but also guarantee a minimum return.

The money invested in an annuity grows tax-deferred. When you start receiving payments, the amount you contributed to the annuity is not taxed, but earnings are taxed at regular income tax rates.

Yes, but withdrawing funds from an annuity before the age of 59½ may result in penalties and income taxes. It’s important to view annuities as long-term investments.

Payments are calculated based on the amount invested, the duration of the payment period, the rate of return guaranteed by the annuity, and other terms agreed upon in the contract.

Depending on the type of annuity, any remaining payments can continue to a designated beneficiary. It’s crucial to understand the specifics of your annuity contract to know how your funds will be handled after your death.

At River City Senior Benefits, we provide personalized service to help you select the right annuity based on your specific financial goals and retirement needs. Our experts are committed to helping you understand all your options and ensure that you make the best investment for your future.