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Annuities. What is an Annuity?

Most people don’t wake up wanting an annuity - they want security, predictability, and peace of mind.

 

Annuities are solutions to common retirement concerns:

 

  • “Will I outlive my savings?”

  • “What if the market crashed in retirement?”

  • “How do I get guaranteed income I can’t outlive?”

  • “How do I keep my spouse protected if I pass first?”

 

Simple explanation:

 

*Annuities are financial tools designed to turn your savings into guaranteed income and protect your money from market loss.

 

*An annuity is a contract with an insurance company that can grow your money safely and give you guaranteed income for life.

 

That’s the entire foundation.

***THINK OF AN ANNUITY AS A PERSONAL PENSION***

“Imagine creating your own pension that pays you every month for life - even if you live to be 105”

 

****A SEAT BELT FOR YOUR MONEY****

“If the market falls, your annuity acts like a seat belt - your value won’t drop”

 

*****A LIFETIME PAYCHECK*****

“You stop working, but your annuity doesn’t. It keeps paying you.”

There are (3) main types of Annuities.

 

1)   Fixed Annuity has safe growth, like a high-yield CD.

 

*Guaranteed interest rate

*Principal Protection

*Simple and predictable

*No market link

**Best for: people who want safe growth.**

 

2)   Fixed Indexed Annuity (FIA) - Market-linked growth without market loss.

 

3)   Immediate / Income Annuity - A personal pension

 

* Turn a lump sum into instant monthly income.

* Guaranteed for life.

 

**Best for: retirees wanting predictable income right now. Or if you have a lump sum of $ and aren’t sure where to put it. For example, inheritance $, divorce settlement $, lottery proceeds, proceeds from sale of a home, bonus from job/business.

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  1. Guaranteed Lifetime Income - Most powerful and easiest to explain.

  2. Protection from Market Loss - Especially for people near or in retirement.

  3. Tax-Deferred Growth - Money compounds faster.

  4. Options for Spousal Protection - Income can continue for both lives.

  5. *Can fill in the gap between retirement age and drawing Social Security Benefits.

  6. No probate - Beneficiaries receive funds quickly.

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(Common Misconceptions)

 

  • Many people have heard negative or outdated ideas.

 

MYTH - “Annuities have huge fees.”

 

Reality: Some do, some don’t. Fixed annuities and many indexed annuities have NO FEES AT ALL.

 

MYTH - “The insurance company keeps my money when I die.”

 

Reality: You choose beneficiaries. They receive remaining funds or continuation of income.

 

MYTH - “My money is locked up forever.”

 

Reality: Most annuities allow penalty-free withdrawals every year.

 

 

An annuity makes sense when someone:

 

  • Wants guaranteed income in retirement.

  • Wants protection from market risk.

  • Wants to diversify away from the stock market volatility.

  • Wants tax-deferred growth.

  • Wants to cover a spouse for life.

  • Wants money they cannot outlive.

 

Not a good fit for someone who:

 

  • Needs full liquidity.

  • Has very short-term goals.

  • Is still fully in risk growth mode (20s - 40s)

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