Annuities – A complicated topic

Annuities are complicated and even creating a website can be challenging.  There is not a way for us to provide the information needed that can fit everyone’s needs.

Annuities have often gotten a bad reputation.  The main reason is related to poor sales practices, uneducated buyers and sellers and the complexity of contract design.  Annuities are a tool that should be used when appropriate to achieve certain financial outcomes.

Annuities are contracts issued by insurance companies that can be used to guarantee an income stream similar to a pension.   Annuities can also provide principal guarantees with potential for growth.

  • Our thoughts around annuities:
    • Annuities are not a one-size fits all solution
    • Annuities, if used, should often be a smaller portion of your portfolio
    • Annuities are used to guarantee an income stream as part of your financial plan
    • Annuities are usually income generating or a conservative asset class
    • Annuities may be income taxable and often may not be optimal for inheritance
    • Annuities can be Federal Income tax deferred, which can be useful for retirees needing to control their income
  • We usually recommend considering annuities for 3 scenarios:
    • As part of a pension buy up or government offered annuity
    • As a purchase of a guaranteed income stream
    • As a bond replacement or a fixed income replacement like a CD
Purpose Conservative Accumulation Guaranteed Income Stream Principal Guarantees with upside potential
Similar Solutions Bonds or CDs Pension or Social Security Market Link CDs and Structured Notes

Not a bank or credit union deposit, obligation or guarantee. May lose value. Not FDIC or NCUA/NCUSIF insured. Not insured by any federal government agency. Annuity contracts have terms and limitations for keeping them in force. Contact your financial professional or insurance producer for complete details. Guarantees and benefits are subject to the claims-paying ability of the insurance company. Withdrawals may be subject to federal income taxes and a 10% early withdrawal tax penalty may also apply for amounts taken prior to age 59 1/2. Consult an attorney or tax advisor for more information. Interest rates may vary on any subsequent purchase payments(s). Interest rates are subject to change without notice. Please see each company's product fact sheet for surrender charges, fees and restrictions.