An annuity is an investment product that is designed to provide a guaranteed income stream for a predetermined period, often for the rest of one’s life. An annuity is typically purchased from an insurance company, and the purchaser makes regular payments or a lump sum payment to the insurer in exchange for the right to receive a guaranteed income stream in the future.
Annuities can be structured in different ways, and there are several types of annuities available. The most common types of annuities are fixed annuities and variable annuities.
Fixed annuities offer a fixed rate of return on the investment, and the insurance company guarantees a minimum interest rate for a certain period. Variable annuities, on the other hand, allow the purchaser to invest in different investment options, such as mutual funds, and the return on the investment depends on the performance of the selected investments. However, variable annuities have the possibility of losing the principal investment due to investment declines.
Annuities can also be structured to provide income for a specific period, such as 10 or 20 years, or for the rest of one’s life. The amount of the income stream is typically determined by several factors, including the amount of the initial investment, the age of the purchaser, and the length of the payment period.
One of the key benefits of annuities is that they provide a guaranteed income stream, which can be particularly appealing for retirees who are looking for a stable source of income to supplement their retirement savings. However, annuities can also be complex and may come with fees and other costs that can affect the overall return on the investment. Also, all guarantees are subject to the claims-paying ability of the insurer. Guarantees apply to minimum income from annuity and do not guarantee an investment return. Lifetime benefits are often an additional rider.
It’s important to carefully consider the pros and cons of an annuity before making a purchase, so it might be best to work with a financial professional who can help evaluate the options and determine if an annuity is a good fit for one’s financial goals and needs.
Learn More:
If you’re wondering if annuities could work in your financial strategy, contact us today for a complimentary review of your retirement strategies. Reach out to us at (540) 720-5656 to get started with a financial professional to build or enhance your financial position.
Sources:
Amy Anderson joined the ILG Financial team in 2023 as the client relations coordinator. Her responsibilities include scheduling of appointments, annual check-up notifications, and annuity and required minimum distribution assistance. She is a graduate of Harding University with a degree in Computer Information Systems. Amy and her husband have two children and she enjoys reading, crocheting, music and spending time with her family.
Chase Lopez joined the ILG Financial team in 2020 as an advisor. Chase is a 2016 James Madison University graduate with a degree in management. Chase has been trained under the tutelage of Dave Lopez, who is not only the founder and managing member of ILG Financial, but also is Chase’s uncle and godfather. He also enjoys working alongside his cousin, Megan, who is Dave’s daughter. Chase, as a fiduciary, believes in putting his clients interests first, and building out plans for his clients where they can have a happy and fruitful retirement. He married his beautiful wife in February 2022 and both use most of their free time chasing around their little pup, Aurora.
Jessica Carson joined the ILG Financial team in 2018 as an agent. Jessica and her husband have four children, two dogs, 3 barn cats, 5 chickens, and three parakeets. She indeed loves her children and pets! When not at work, Jessica enjoys playing the piano and cello as well as traveling and spending time outside with her family, hiking, fishing, and boating.
Terri Center joined the ILG Financial team in 2019 as client services manager. She handles client records, application processing, and gathering information to provide a professional and friendly experience with all of our clients. Terri is a graduate of Oakland University. She is married and has two children. She enjoys hiking, family time, and puzzle challenging video games. She also likes to share her creativity in her canvas paintings and sewing projects.
Megan Jones joined the ILG Financial team in 2020 as marketing director. Megan and her husband live in Fredericksburg, VA with their German Short Haired Pointer, Gus. Megan is a graduate of Longwood University and holds a degree in communications. Megan is the oldest of Dave Lopez’s three children and not only enjoys working alongside her father, but also with her cousin, Chase, who joined the ILG Financial team in 2020 as an advisor. When not at work, Megan enjoys sitting on the back porch with family and friends enjoying food and music.