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A stable foundation for your future
A popular retirement savings vehicle that was created for long-term investors, a fixed annuity earns a steady rate of return. There is an accumulation phase during which funds accrue interest, and then a payout that is deferred until a maturity date. It’s like a bank CD or savings account, except it is offered by an insurance company. You deposit an initial lump-sum and the insurer provides a guaranteed return after a fixed period of time without risk that you will lose your principal.
While a fixed annuity provides steady, guaranteed, and worry-free growth, another major advantage is tax-deferral. While the interest on a CD is taxed yearly, a fixed annuity lets you defer all tax on earnings until withdrawal.
Fixed annuity interest rates usually exceed rates available on bank CDs. A fixed annuity also offers other significant benefits that a bank CD cannot match:
|Bank CD||Fixed Annuity|
|Access to a portion of money without surrender charges2||X|
|Hospital and nursing home benefit||X|
|Potential social security taxation advantages5||X|
|10-day free look||X|
For current rates and additional information, or if you simply have questions, please contact Meyer and Associates’ Advisory Services at AdvisoryServices@meyerandassoc.com or 800-635-7801, without obligation.
1CDs are FDIC insured, while annuities are backed by the financial strength of the insurer.
2Withdrawals taken before age 59 ½ are generally subject to a 10% tax penalty.
3Tax-deferred annuities bypass probate proceedings and go directly to the named beneficiaries.
4Unlike other assets, in most states, a tax-deferred annuity may not be attached to any judgments against you.
5Earnings from a tax-deferred annuity are not included in the formula to calculate taxes on Social Security Benefits as is the case with CDs, bonds and pensions. You should consult with your tax advisor regarding your own situation.
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