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Annuities

Thinking about retirement? Our Florida licensed professionals will help find an Annuity to exactly suit your needs

Our Annuities may be used to help you increase savings protect your savings, or generate a stream of income.

What is an Annuity ?

An annuity is a contract, or form of investment, providing you with a fixed sum of money each year (typically for the rest of your life), or a form of insurance entitling the investor to a series of annual sums.

Here's how an annuity works: you make an investment in the annuity, and it then makes payments to you on a future date or series of dates. The income you receive from an annuity can be doled out monthly, quarterly, annually or even in a lump sum payment.

You can opt to receive payments for the rest of your life, or for a set number of years. How much you receive depends on whether you opt for a guaranteed payout (fixed annuity) or a payout stream determined by the performance of your annuity's underlying investments (variable annuity).

Annuity assets grow tax-deferred, and interest is compounded. When you begin making withdrawals or receiving payouts, you will only pay taxes on the interest earned if you paid for the annuity with after-tax dollars. There is no IRS limit as to how much premium you can put into annuities.

Types of Annuities

Immediate Annuity - With an immediate annuity you begin to receive payments soon after you make your initial investment. You might consider purchasing an immediate annuity as you approach retirement age.

1Choosing an immediate annuity isn't as simple as identifying the one with the highest monthly payout. There are so many options:

  • Single life annuity
  • Joint-and-survivor annuity
  • Annuity that guarantees payment for a specified period
  • Cost of living riders to accommodate inflation

2Deferred Annuity - With a deferred annuity, your money is invested for a period of time until you are ready to begin taking withdrawals. The deferred annuity accumulates money while the immediate annuity pays out. Deferred annuities could be converted into immediate annuities when the owner wants to start collecting payments.

Investment Options

Fixed Annuity - Fixed annuities are essentially CD-like investments issued by insurance companies. They pay guaranteed rates of interest, usually higher than bank CDs.  Fixed annuities can be deferred or immediate.  Guaranteed interest makes a fixed annuity appealing to investors who are wary of the stock market's ups and downs.

Variable Annuity - The variable annuity allows you to choose from a selection of investments (stock or bond mutual-fun-like portfolios), and then pays you a level of income in retirement that is determined by the performance of the investments you choose. Unlike their fixed counterparts, variable annuities are designed to pump up your savings by giving you a chance for long-term capital growth.

Equity Indexed Annuity - An equity-indexed annuity is a combination of a fixed and a variable annuity. Equity-indexed annuities give you the best of both worlds.  You have a guaranteed return, as with the fixed annuity, (usually 2-3%), but there is an upside:  You also have a shot at higher gains if the stock market rises, since an equity indexed annuity's return is also tied to the performance of a benchmark index, such as the Standard & Poor's 500.

QLAC - A New Annuity to Minimize Your RMDs in Retirement

d93d7c_07a83df7fbbb4120af8c06f161da66b9.png_srz_p_573_188_75_22_0.50_1.20_0.00_png_srzYou can now choose to invest some retirement account money in a deferred-income annuity. Most retirees have two big concerns: outliving their savings and paying taxes on their withdrawals. Now there's a way to deal with both of those issues. A new type of annuity, called a qualified longevity annuity contract, or QLAC, lets retirees lock in income in the future and avoid taking taxable required minimum distributions (RMDs) on as much as $125,000 of their retirement savings.

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QLACs provide a tax-advantaged twist on deferred-income annuities (also known as longevity insurance), which insurers have offered for several years. You usually invest in these annuities when you're in your sixties in order to receive guaranteed lifetime income starting 10 or 20 years down the road. But until recently, you couldn't delay that long if your money was in an IRA or a 401(k) because such accounts require that you start taking withdrawals at age 70 1/2. "We saw a tremendous cluster of people taking the payouts at age 70," says Ross Goldstein, managing director for New York Life, which has a popular deferred-income annuity. "They had no choice."

When you pick a QLAC, the key decisions are when to begin payouts and whether to include a death benefit. The longer you wait, the more you'll get. A 65-year-old man investing $125,000 in MetLife's QLAC, for example, will get about $33,000 per year if payouts begin at age 80; he'll receive more than $64,000 if he delays payouts to age 85 (women, who tend to live longer, receive less). But if the man dies before the designated payout age, he'll get nothing.

Adding a death benefit reduces your annual payouts. If the 65-year-old man chooses a return-of-premium death benefit, his heirs will get back the $125,000, minus any money he already received, but his annual payouts would drop to about $26,000 starting at age 80 or about $46,000 starting at age 85. Some insurers also let you continue payouts for your spouse after you die.