If you’re seeking consistent, guaranteed returns and reduced risk, fixed annuities could help you reach your objectives. There are different types of annuities to fit varying risk tolerances. So, whether you’re saving for retirement, nearing retirement or living in retirement, choosing the right annuity could help you reach your financial objectives.
Ideal for more risk-averse investors, a fixed annuity typically guarantees no loss of principal or earned interest. Fixed annuities also guarantee to pay a specified interest rate based on the current environment. This rate is guaranteed for a period of one or more years, known as the rate period, and subsequent renewal rates are guaranteed to stay above a specified minimum rate.
Fixed annuities have additional benefits besides principal protection. These distinct benefits could make fixed annuities attractive additions to a retirement portfolio. With a guaranteed interest rate, fixed annuities can be a source of predictable and protected cash flow for retirees. Because distributions are optional, fixed deferred annuities can also be used as a vehicle for steady, protected growth with compounded interest. Also, many annuities feature a death benefit that pays the account value to beneficiaries, at which point withdrawal penalties are waived. During the rate period, you are typically provided with partial liquidity of your account up to 10% with no penalties.
Fixed annuities have no explicit fees; you keep what you earn, though most have early withdrawal penalties that decline over your initial rate period. By the end of your chosen rate period, the withdrawal penalty no longer applies. Because all annuities offer tax-deferred growth, you would pay taxes on any gains withdrawn. If it is an IRA (qualified) annuity, the full amount withdrawn will be taxed as ordinary income. Also, to avoid owing penalties to the IRS, wait to withdraw until you are age 59 and a half.
If you would like to learn more about fixed annuities and how they can fit into your retirement plan, call TFCU Financial Advisors today.
TFCU Financial Advisors
6501 Tinker Diagonal, MWC
(405) 737-0006
TFCUFinancialAdvisors.org
Securities are offered through RAYMOND JAMES FINANCIAL SERVICES, INC., Member FINRA/SIPC, and are not insured by NCUA or insured by any other government agency. Funds are NOT GUARANTEED nor are they deposits or obligations of the credit union or any affiliated entity of the credit union, and are subject to risk, including the possible loss of principal. Tinker Federal Credit Union, Tinker Financial Services, LLC and TFCU Financial Advisors* are not registered broker/dealers and are independent of Raymond James Financial Services, Inc. Investment advisory services are offered through Raymond James Financial Services Advisors, Inc., a non-affiliated third party provider to Tinker Financial Services, LLC and Tinker Federal Credit Union. All investments and information are intended for U.S. residents only. *TFCU Financial Advisors is a registered trademark and ‘dba’ of Tinker Financial Services, LLC.
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