May 26, 2020

What is an Annuity?

Q & A with Angela Bender, CFP®, and AMJ's managing partner

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Question: What is an annuity and is it true you can live off that interest alone in retirement?

Answer:   An annuity is an insurance contract for retirement that allows for tax deferral of the earnings in the annuity account. There four flavors, so to speak, of annuity contracts:

a)    Fixed annuity: think CD-style instrument. It allows for a stated interest rate for a stated period to be paid to the Contract Owner.

b)   Immediate Annuity: Pays the clients an income of the invested amount and the stated interest rate for a stated period. The income will never increase.

c)    Indexed Annuity: this contract allows for some portion of the return of an index to be credited to the contract annually for a specific stated amount of time. You usually have limited to no losses of the contract value if the index you follow has negative returns.

d)   Variable Annuities: These are very complex money management products wrapped in a tax deferred shell. They have both gains and losses that are credited to the account owner daily.

Whether or not you can live off the interest alone is totally dependent on your income need and other sources of income. Again, that is where financial planning and being very clear on your goals is key.

Securities offered through Triad Advisors, LLC, Member FINRA/SIPC

Investment Advisory Services offered through AMJ Financial Wealth Management LLC

AMJ Financial Wealth Management LLC is not affiliated with Triad Advisors LLC

The information provided for informational purposes only, and does not constitute an offer, solicitation, or recommendation to sell or an offer to buy securities, investment products or investment advisory services. All information, views, opinions, and estimates are subject to change or correction without notice. Nothing contained herein constitutes financial, legal, tax, or other advice. These opinions may not fit to your financial status, risk and return preferences.

Securities offered through Triad Advisors, LLC, Member FINRA / SIPC 

Investment advisory services offered through AMJ Financial Wealth Management LLC

AMJ Financial Wealth Management LLC is not affiliated with Triad Advisors, LLC
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