Annuity Solutions for Retirement Income

Annuities are complex and often a very misunderstood retirement solution. There are many types of annuities: variable, fixed, immediate, and index to name the most common. Very often all these types are lumped together which many times gives them a negative connotation. Very simply, annuities should be used to solve a very specific solution, typically tax deferral or guaranteed income

When one purchases an annuity, one is giving money to an insurance company and the insurance company is assuming the risk a consumer would ordinary assume. Because the insurance company is assuming a risk that a consumer would like to pass on there is a fee, consumers must access if the fee is justified for the risk assumed.

Fixed and Variable annuities are suitable for long-term investing, such as retirement investing.  Gains from tax-deferred investments are taxable as ordinary income upon withdrawal. Guarantees are based on the claims paying ability of the issuing company. Withdrawals made prior to age 59 ½ are subject to a 10% IRS penalty tax and surrender charges may apply.  Variable annuities are subject to market risk and may lose value.