When planning for retirement, many investors look for strategies that can provide reliable income, protect against market volatility, and offer confidence. One financial tool that can help address those goals is an annuity.
At NFA Wealth Management, we believe education is key to confident financial decision-making. Here’s what you need to know about annuities—how they work, when they make sense, and how they can fit into your retirement strategy.
An annuity is a contract between you and an insurance company designed to provide a stream of income, either for a specific period or for life. In exchange for a lump sum or a series of payments, the insurer promises to make periodic payments to you in the future.
Annuities can be used for:
Protecting against outliving your savings
There are several types of annuities, each with its own features and benefits:
Deferred Annuities allow your investment to grow tax-deferred before turning into an income stream later in life.
No Contribution Limits: Unlike IRAs or 401(k)s, there are typically no IRS-imposed limits on how much you can contribute to an annuity.
Annuities aren’t for everyone, and it’s important to consider:
That’s why it’s important to work with a knowledgeable advisor who can help you evaluate if an annuity aligns with your personal financial goals.
Annuities can be a powerful part of a retirement strategy—especially if you’re seeking:
However, your broader financial picture should always drive the decision.
Fixed and Variable annuities are suitable for long-term investing, such as retirement investing. Gains from tax-deferred investments are taxable as ordinary income upon withdrawal. Guarantees are based on the claims paying ability of the issuing company. Withdrawals made prior to age 59 ½ are subject to a 10% IRS penalty tax and surrender charges may apply. Variable annuities are subject to market risk and may lose value.
Riders are additional guarantee options that are available to an annuity or life insurance contract holder. While some riders are part of an existing contract, many others may carry additional fees, charges and restrictions, and the policy holder should review their contract carefully before purchasing. Guarantees are based on the claims paying ability of the issuing insurance company.
The Standard & Poor’s 500 Index is a capitalization weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.
At NFA Wealth Management, we help clients understand how annuities can support their overall financial plan. Our goal is to simplify complex financial tools and offer strategies that align with your goals, lifestyle, and legacy.
Interested in learning more about annuities? Let’s schedule a conversation to explore the right options for your retirement plan.
