Whether you’ve learned about annuities before or it’s your first time hearing about them, it’s important to first understand the basic concept and one of its simplest forms. In general, an annuity is a financial product that provides a steady stream of income over time. Sometimes for a standard form of an annuity—a fixed annuity—that period is the remainder of your life. There are different types of annuities, but in this blog, we’ll focus on fixed annuities.
A fixed annuity is a type of annuity that guarantees a fixed interest rate for a specified amount of time. This means that you will receive a fixed amount of money at regular intervals, typically monthly, quarterly, or annually. The insurance company that issues the annuity invests your money in conservative, low-risk assets such as bonds and certificates of deposit. The interest earned on these investments is used to pay out your annuity payments. It’s important to note that 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.
How does a fixed annuity work? Well, let’s say you have $100,000 that you want to invest in a fixed annuity. You purchase the annuity from an insurance company, which promises to pay you a fixed interest rate on your investment. The interest rate is typically higher than what you would earn in a savings account or a CD, but often lower than what you would earn on a good year in the stock market.
Usually, after fees have been deducted from the principal, the insurance company then invests your money in a mix of bonds and other investments deemed to have a low risk. The interest earned on these investments is used to pay out your annuity payments. The amount of your annuity payments depends on several factors, including the size of your investment, the length of the annuity, and the interest rate.
Because fixed annuities provide a guaranteed stream of income, they can help supplement your social security income and can be a workable replacement for the lack of a pension, and are backed by the financial strength of the insurance company that issues them. Additionally, fixed annuities may have lower fees than some other investment products, which means that more of your money goes toward earning interest and providing you with income.
Fixed annuities can be a good choice for those who want a guaranteed stream of income in retirement. They offer a fixed interest rate for a set time or for life. If you are considering a fixed annuity, be sure to do your research and choose an insurance company with a strong financial rating.
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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.