Immediate annuities guarantee income: You pay a sum of money to an insurance company, and the firm provides you with a stream of payments that can last a lifetime. Payments begin as soon as 30 days after purchase.

According to Rob Williams, managing director of wealth management at Charles Schwab, and NerdWallet, now may be a good time for retirees to purchase an immediate annuity because payouts are at their highest in a decade.

As with any investment, before purchasing an immediate annuity, you’ll want to consult with a licensed financial advisor.

Why Think About an Immediate Annuity

Outliving your money is one of the major risks associated with retiring, and annuities can offer you peace of mind regarding this. Knowing that you’ll always be taken care of if you have enough guaranteed income to pay basic needs is important and invaluable knowledge.

Social Security is a significant source of guaranteed income, and some people still have traditional pensions. However, an immediate annuity could close the gap if your guaranteed income is insufficient to pay for your basic expenses.

How Much an Immediate Annuity Pays Out

There are numerous different annuity types, some of which are quite complex. Immediate annuities, however, are quite simple: Your payout is mostly influenced by the amount you invest, your age, the current interest rate environment, and the payment type you select.

According to Charles Schwab’s annuity income estimator, a 65-year-old male and female who invest $100,000 can anticipate receiving about $535 monthly if they select the joint life option, where the payment is made for both of their lifetimes. The monthly check reduces to roughly $532 if they opt for the cash return option, but any money that is left over in the event that the couple passes away before receiving their initial investment is given to their heirs. Simple, right?

Use Annuity FYI’s Income Annuity Quoting System to see exactly how much income you can receive in real-time.

Pay Attention to Insurer Ratings

Retirees browsing the annuity market should also take the insurance company’s rating into account. 

Tax Considerations

The source of the funds you used to purchase the annuity will determine how your payouts are taxed. A portion of each payment will be regarded as a return of your investment and won’t be taxed if the money comes from an after-tax account, such as a savings or brokerage account. 

The payouts will normally be taxed if the annuity is purchased with funds from a qualifying retirement account, such as an IRA or 401(k), but so will any withdrawals from such an account. When it comes time to determine necessary minimum distributions, which typically have to start at age 73, the money used to purchase an instant annuity won’t be regarded as a part of your retirement funds. For large savers who are concerned that such payouts may drive them into a higher tax band, this could be a blessing.
Learn more about annuities that produce guaranteed income.

The post Retirement is a Perfect Time to Purchase an Immediate Annuity first appeared on Annuity FYI.

Are you thinking about retiring? And what that could look like for you? If you are, your primary goal is most likely to be able to retire comfortably with a steady stream of income. New York Life reviews the safety of annuities. 

Guaranteed Monthly Income for Life

Annuities can assure that you have a steady monthly income for the rest of your life, and also the life of your spouse. Many retirees and annuity owners use this income for their day-to-day living expenses. It can also provide you the peace of mind that you won’t outlive your savings, which is known to be a common concern among retirees.

Annuities provide solutions based on your needs, risk tolerance, and financial objectives. Consider when you will need retirement income and whether you will need it now or later to determine the type of annuity you should purchase. Annuity FYI has information on a variety of guaranteed income annuities to meet your needs. These annuities include immediate annuities, which begin paying in as little as 30 days, deferred income annuities, which begin paying at a later date, determined by you.

What is the safest type of annuity?

Fixed annuities also known as multi-year guaranteed annuities (MYGAs) are among the most secure financial investments. Opposingly, variable annuities can be more volatile because they invest in equities or bonds, so their performance is influenced by market conditions.

Can you lose your money in an annuity?

Yes, although certain products have downside protection, some variable annuities can cause you to lose money. Again, these annuities are influenced by the investments to which they are tied, so this means that you can get rewarded based on the performance of your investment portfolios. This also means you may lose money if these investments do not perform adequately. 

On the other hand, fixed annuities offer guaranteed rates of return. With these annuities, you have the assurance of knowing your money is safe and secure while earning attractive returns over time. So whether you’re looking for shorter-term growth of your savings, or long-term retirement income for life, an annuity could be the perfect and secure solution.

Here are some recent product reviews that may be of interest to you:

American Equity IncomeShield 10

CL Tarrant Trail

Athene Accumulator 10

For more information contact Annuity FYI at 1-866-223-2121 to speak to a registered agent. You can also visit our website, AnnuityFYI.com, or send us an email at support@annuityfyi.com.

The post The Rock-Solid Safety of Annuities first appeared on Annuity FYI.

Forbes recently published an article called  “How to Buy an Annuity” by John Egan. This article includes tips to begin and continue the journey towards purchasing an annuity.

A lot of retirees who could benefit from investing in annuities typically steer clear of them, and it is because many Americans underestimate how long they live. It is quite a loss in the long run, because according to Forbes, annuities have many upsides, and one is longevity. 

“One of the biggest risks of retirement is outliving your money,” said Brian Walsh, CFP, manager of financial planning at SoFi. “If you are worried that you will live a long time, annuity payments that cover a certain portion of your expenses when combined with Social Security could be worth consideration.”

Determining whether to buy an annuity is the first step.

1. Search for a Financial Advisor

Recognize Your Financial Objectives

Consider these questions:

• Do I desire consistent lifetime income?
• Do I want to postpone paying investment-related taxes during my years of highest income?
• Do I wish to gain from distributions spread out over a set period of time?
• Do I wish to delay payments until I begin to receive Social Security benefits?
• Are you willing to invest a chunk of change now, in order to experience gains in the future?

2. Comparison-Shop for Annuities

Although there are a significant number of sources for annuities, life insurance companies are not the only ones. Consider all of your options, including insurance agents, financial planners, brokerage firms and banks.

If you want to buy an annuity:

Check the company’s financial standing, customer complaints, and online reviews before choosing a life insurance provider..

• Verify various providers: The first contract that someone tries to sell you is one that experts advise against doing.
• Verify a provider’s licensing status: Does the prospective insurance agent have a license to offer life insurance in your state? Is the agent authorized to sell variable annuities, if that’s what you’re looking at?
• Look into the history of the seller: If you’re looking into a life insurance company, check out the company’s financial health, consumer complaints and online reviews.

3. What Type of Annuity to Buy?

The National Council on Aging advises deciding on an annuity based on the commencement date, rate of return, length of payout period (such as five years or a lifetime), and whether you want a lump sum payment or regular payments.

Generally, annuities fall into three buckets:

• Fixed annuity: A fixed annuity guarantees a minimum interest rate and a fixed amount of payments. 
• Variable annuity: Payments into a variable annuity can be directed toward several investment options, such as mutual funds. The payout is based on how much money you put in, the investment returns, and the fees and other costs. 
• Index annuity: An index annuity is a hybrid between an insurance product and a securities offering. The returns from an index annuity are tied to a stock market index. 

Our top annuity picks are here.

4. Check Out the Fees

Fees are one of annuities’ main downsides. Therefore, before purchasing an annuity, you should find out everything about its fees.

“Historically, annuities are known for having extremely high fees, which is troubling because fees can severely impact the long-term growth of your money,” Walsh said.

Variable and index annuities usually charge higher fees than fixed annuities. Different annuities come with different fees, but a buyer typically can expect to pay 2% to 3% in fees and commissions. 

5. Annuity Provider is Key

Once you’ve researched your options, it’s time to figure out where to buy the annuity. 

Things to consider are:

• Are you leaning towards buying the annuity directly from a provider?
• Are you fine with buying the annuity online or over the phone?
• Would you rather purchase the annuity in person, such as at an insurance agent’s office?

6. Apply for an Annuity

You must submit an application if you want to buy an annuity. Before submitting, make sure you truly understand how the annuity works. Always ask questions.

7. Funding Method Options

You must choose a funding method when you purchase an annuity. Funding options include payment from sources such as a checking account, savings account, investment account, retirement account or inheritance. Additionally, you might be able to purchase an annuity through a retirement plan offered by your company.

8. Free Look’ Period to Keep in Mind

Providers of annuities provide a “free look period.” If you decide you don’t want the annuity, you have the option of getting your money back without incurring any financial penalties. Typically, this window of time after you sign an annuity contract is between 10 and 30 days.

For more information on specific annuities read Brian White’s full article here.

For more information contact us here:

The post How to Purchase Annuities first appeared on Annuity FYI.

The financial environment in 2022 led more people to seek the protection offered by fixed annuities. This can be attributed to the unprecedented long-term market volatility and rising interest rates not seen since the financial crisis.

According to InsuranceNewsNet sales of protection-based annuities, which include fixed-rate deferred annuities, fixed indexed annuities without a guaranteed living benefit, registered index-linked annuities without a guaranteed living benefit and traditional variable annuities with a guaranteed minimum accumulation benefit, increased a staggering 60% in 2022.

Lots of these sales were made through the bank channel because fixed annuities can be a great alternative to bank certificates of deposit. Another intrigue of RILAs, FRDs and FIAs is that they are usually short-term investments. On average, they sit for three, five or seven years.

This rise in sales did also have a downside. The industry experienced several delays as they had a tough time meeting the demand for protection. The vast volume alone of annuity business left financial professionals with little to no time or resources to plan and put together more complex financial planning.

Yes, protection is hot right now, but financial professionals must not forget the importance and need for guaranteed lifetime income. LIMRA research states that the most important factor involved in purchasing an annuity is sitting comfortably with a guaranteed lifetime income/withdrawal features.

Since this sales trend won’t continue forever, financial solutions have to be kept in mind. It has been previewed that overall annuity sales will be in the $304 billion to $325 billion range in 2023, which is pretty even with the sales that took place in 2022. According to LIMRA, 2024 will be slightly lower.

For over a decade, annuity sales have been stable at the $210 billion to $250 billion range. LIMRA’s forecast also states that protection products will continue to be a boost of growth for the next several years. The product mix may change and shift, but LIMRA doesn’t anticipate sales going below these numbers.

Demographics that will affect the future of annuities are also plentiful. More people are reaching the age where one would consider purchasing one. The average age of an annuity buyer is in their early 60s, with the majority purchased by people between the ages of 55 and 70. It is clearly reported in Oxford Economics that the U.S. population aged 65 or over will grow by more than 8.3 million from 2022 to 2027.

In 2022, there was $113 billion in new FRD sales and most of these contracts will mature in 2025, 2027 and 2029. Where will this money go then? An FIA or a RILA? Or does it stay in the FRD? For more conservative investors, it will most likely stay in an FRD, but it depends on the economic conditions as well as the investors’ needs.

Flexibility is key for financial professionals right now and solution finding for clients is possible regardless of the future markets or what happens with interest rates. There is and always will be a need for lifetime income and financial security especially as more and more people reach the age of retirement.

For more information contact Annuity FYI at 1-866-223-2121 to speak to a registered agent or send us an email at support@annuityfyi.com.

Written by Rachel Summit

Follow Rachel, aka Finance Mama, on Twitter and Facebook

The post Balance of Growth and Security Is Top Priority as Annuities Rise first appeared on Annuity FYI.

After record breaking sales in 2022, Q1 annuity sales for 2023 hit $92.9 billion, a 47% increase. Information from InsuranceNewsNet confirms that this is the highest quarterly sales ever recorded with results from LIMRA’s Preliminary U.S. Individual Annuity Sales Survey.

“Market conditions continue to drive investor demand for annuities. Every major fixed annuity product line experienced at least double-digit, year-over-year (YOY) growth,” said Todd Giesing, assistant vice president, LIMRA Annuity Research. “Despite expectations that interest rates will level off, LIMRA is forecasting total annuity sales in 2023 to exceed $300 billion for the second consecutive year.”

Increases in sales are everywhere as fixed-rate deferred (FRD) annuity sales were $40.9 billion in the first quarter, which is 157% higher than the first quarter of 2022. FRD sales used to make up about 18% of the market in 2020, and are now making up a stunning 44% of the total annuity market. 

“On average, FRD annuity crediting rates continue to outperform CD rates, making these products very attractive to conservative investors,” said Giesing. “LIMRA anticipates FRD products to have strong sales this year even though interest rates are expected to fall in the second half of 2023. While we don’t expect FRD sales to match the record set in 2022, LIMRA is forecasting sales to be above $100 billion in 2023.”

Fixed-indexed annuity (FIA) sales also hit the ground running with a record-breaking quarter. Total sales were $23.1 billion, this is up 42% and 4% higher than the record set previously in 2022 in the fourth quarter. “Economic conditions remain favorable for FIA products and this is forecasted to continue throughout the year,” said Giesing. 

More records soar as the income annuity market made its highest quarterly sales ever, topping $4.1 billion. Single-premium immediate annuity sales were $3.3 billion in the first quarter, 120% higher than prior year. Deferred-income annuity sales have risen 125% YOY to $820 million in the first quarter.

LIMRA has expectations of strong sales in the first half of the year and sees the growth to be at least 15% in 2023. This is all while investors are looking to lock in favorable payout rates before they begin to fall.

On a different note, traditional variable annuity (VA) sales are coasting to a slow down. VA sales were $12.9 billion in the first quarter, and deflated 30% from the first quarter of 2022. LIMRA is predicting sales growth in this category to be flat in 2023, as market volatility is expected to carry on.

Registered index-linked annuity (RILA) sales totaled $10.4 billion in the first quarter of 2023, up 8% from 2022. These will keep on attracting investors who are searching for a greater return as well as willing to accept some of the disadvantages. LIMRA forecasts RILA sales to blow up in 2023, likely growing at least 10%.

These preliminary first quarter annuity industry estimates for 2023 are based on monthly reporting, and a reflection of 83% of the total market. First quarter totals of 2023, and top 20 rankings of variable and fixed annuity writers will be at hand in mid-May.

The post Annuity Sales for Q1 At All-Time High, Limra Says first appeared on Annuity FYI.

Annuity sales—also supported by rising interest rates—are surging. According to InsurnaceNewsNet.com, if current market conditions hold, fixed annuities, fixed-indexed annuities (FIAs), and registered index-linked annuities (RILAs) are predicted to compete more fiercely with one another during the next five years.

If these fixed annuity rates remain high, advisors and their clients will likely continue as well, electing a predictable rate of return with full principal protection versus annuities that offer much potential with principal at risk. Nevertheless, as interest rates decrease over time, Cerulli predicts, by 2027, market share of fixed-indexed annuities (FIAs) as a percentage of total annuity sales will increase and reach 26%, followed closely by RILAs (23%) and traditional fixed annuities (20%). “With financial markets and economic news remaining unsettling for many investors, annuities that provide predictable outcomes will remain a hot commodity,” states Donnie Ethier, senior director.

RILA sales growth has outrun many other annuity types in the last few years, but recently, thanks to rising interest rates, these products have met stronger competition from traditional fixed annuities and FIAs. This situation will be worth watching in 2023 and 2024. It is clear from research that traditional variable annuity (VA) sales will remain under pressure as insurers and advisors steer clear from selling VA’s with benefit guarantees.

Cerulli sees three possible areas of growth within the annuity market in the coming years. All of them are reflective of the needs and preferences of the 44% of retired households citing a comfortable standard of living in retirement as their most important financial goal. Yes, insurers have done their part to enhance product solutions, but those that remain committed to the VA marketplace should expand their focus on guaranteed withdrawal benefits (GLWBs). Insurers should also bring more annuities to defined contribution plans. The SECURE Act of 2019 and the just-enacted SECURE 2.0 extend the distribution age requirement and provide retirement savings incentives for qualified plans. The third and final area of growth lies in supporting the cost of long-term care, (LTC) intentions should include in-plan annuities, income-taking solutions, LTC hybrids, and inflation protection features.

The present and beneficial conditions in the annuity market has Cerulli believing insurers need to use this leverage, and nudge the industry conversation toward product concepts. “Understandably, the industry is focused on principal protection right now, but the income story of annuities will return and grow in importance,” states Ethier. “The industry would benefit from more studies that compare the pros and cons of various income strategies, such as systematic withdrawals from one’s investments, traditional annuity payments, and GLWB withdrawals,” he adds.

For more information contact Annuity FYI at 1-866-223-2121 to speak to a registered agent. You can also visit our website, AnnuityFYI.com, or send us an email at support@annuityfyi.com.

Written by Rachel Summit

Follow Rachel, aka Finance Mama, on Twitter and Facebook

The post Fixed Annuity Sales Surge, but Common Trends Will Soon Return first appeared on Annuity FYI.

One of America’s leading financial services organizations, Equitable, has just announced the updating of two of its most popular registered index linked annuity (RILA) products, according to an article from InsuranceNewsNet.com. The improvements were designed to help consumers manage volatile equity markets while generating lifetime income despite rising inflation and interest rates. 

Equitable’s Structured Capital Strategies® Income (SCS Income) was launched in November 2021 and is a RILA that combines some protection from volatility while giving investors an opportunity to take advantage of equity market growth. The latest update has increased certain income rates credited under the income option by 25  bps. Additionally, both commission and fee-based versions of Equitable’s Structured Capital Strategies® PLUS (SCS PLUS) RILA are now available in New York.

“Clients are experiencing the perfect storm – a volatile equity market, inflation higher than we’ve seen in four  decades, rising interest rates, and fixed income markets that are not providing the investment diversification they once did,” said Steve Scanlon, Head of Individual Retirement, Equitable. “As a  result, the traditional 60/40 stock and bond portfolio has rightfully come into question. We believe that an annuity used as an asset class in a portfolio can help mitigate these challenges by providing for income, growth opportunities and the ability to address some equity market risk. The result of adopting these updated annuity-based products can be a more diversified and resilient portfolio,” he added. 

Equitable is responsible for the creation of Structured Capital Strategies®, the first registered index-linked, or buffered, annuity in 2010. 

RILA products, such as SCS PLUS, are popular among consumers who are reaching retirement age because they offer partial protection from the sequence of return risk associated with a correction, or bear market. A 2021 CANNEX study found that 55% of investors believe protecting income is important.

The updates made to the Structured Capital Strategies® variable annuity suite are similar to those made earlier this year to Equitable’s Investment Edge® investment only variable annuity. These included the addition of 20 structured investment option segments that provide particle downside protection from equity market losses and upside potential up to a cap, and asset allocation options that give consumers access to popular investment choices in a tax-deferred format. For more information about these, or any other annuity products, contact Annuity FYI at 1-866-223-2121 to speak to a registered agent. You can also visit our website, AnnuityFYI.com, or send us an email at support@annuityfyi.com.

Written by Rachel Summit

Follow Rachel, aka Finance Mama, on Twitter and Facebook

The post Equitable Updates Annuities to Meet Current Needs first appeared on Annuity FYI.

One of the leading providers of life, disability, dental and other benefits in the U.S., Guardian life Insurance Company of America, has just launched a new fixed indexed annuity with an optional guaranteed living benefit rider. 

In an effort to help mitigate market volatility and longevity risk, the company introduced the Guardian Secure Index Annuity, offering guaranteed retirement income which clients cannot outlive. There’s even growth potential to boot!  

According to a recent InsuranceNewsNet article, almost 80% of working Americans feel that it’s important to have a guaranteed source of income in retirement, which is exactly what this new product offers. Potential gains can be experienced during index upswings based on the selection made at purchase. Additionally, clients are protected from index downturns because they will never lose premium due to a drop in index value. 

“As people begin to contemplate how to financially prepare for retirement, a major concern is how to ensure they don’t outlive their retirement assets,” said Dominque Baede, Head of Life and Annuity at Guardian. “The Guardian Secure Index Annuity can be a strategic tool in a client’s retirement strategy by ensuring an ongoing source of income during retirement with the added benefit of potential growth. Creating the opportunity to have retirement assets grow with the added assurance those assets will be available throughout retirement is at the center of how Guardian inspires well-being.”

For a fee, consumers can add the optional Guardian Income Magnifier Rider, which provides the benefit of knowing that the guaranteed income will not decrease for the life of the contract, provided the lifetime withdrawals don’t exceed the Guaranteed Annual Withdrawal Amount (GAWA). This holds true even if the contract value drops to zero. The rider also comes with earning potential and the flexibility to change those protected under it. 

For more information about this, and other annuities, speak with one of our registered agents at 1-866-223-2121. You can also send us an email at support@annuityfyi.com or visit our website, www.annuityfyi.com.

Written by Rachel Summit

Follow Rachel, aka Finance Mama, on Twitter and Facebook

The post First Quarter Annuity Sales Numbers Are In first appeared on Annuity FYI.

One of the leading providers of life, disability, dental and other benefits in the U.S., Guardian life Insurance Company of America, has just launched a new fixed indexed annuity with an optional guaranteed living benefit rider. 

In an effort to help mitigate market volatility and longevity risk, the company introduced the Guardian Secure Index Annuity, offering guaranteed retirement income which clients cannot outlive. There’s even growth potential to boot!  

According to a recent InsuranceNewsNet article, almost 80% of working Americans feel that it’s important to have a guaranteed source of income in retirement, which is exactly what this new product offers. Potential gains can be experienced during index upswings based on the selection made at purchase. Additionally, clients are protected from index downturns because they will never lose premium due to a drop in index value. 

“As people begin to contemplate how to financially prepare for retirement, a major concern is how to ensure they don’t outlive their retirement assets,” said Dominque Baede, Head of Life and Annuity at Guardian. “The Guardian Secure Index Annuity can be a strategic tool in a client’s retirement strategy by ensuring an ongoing source of income during retirement with the added benefit of potential growth. Creating the opportunity to have retirement assets grow with the added assurance those assets will be available throughout retirement is at the center of how Guardian inspires well-being.”

For a fee, consumers can add the optional Guardian Income Magnifier Rider, which provides the benefit of knowing that the guaranteed income will not decrease for the life of the contract, provided the lifetime withdrawals don’t exceed the Guaranteed Annual Withdrawal Amount (GAWA). This holds true even if the contract value drops to zero. The rider also comes with earning potential and the flexibility to change those protected under it. 

For more information about this, and other annuities, speak with one of our registered agents at 1-866-223-2121. You can also send us an email at support@annuityfyi.com or visit our website, www.annuityfyi.com.

Written by Rachel Summit

Follow Rachel, aka Finance Mama, on Twitter and Facebook

The post Protect Against Market Volatility With Guardian’s New Annuity first appeared on Annuity FYI.

One of the leading providers of life, disability, dental and other benefits in the U.S., Guardian life Insurance Company of America, has just launched a new fixed indexed annuity with an optional guaranteed living benefit rider. 

In an effort to help mitigate market volatility and longevity risk, the company introduced the Guardian Secure Index Annuity, offering guaranteed retirement income which clients cannot outlive. There’s even growth potential to boot!  

According to a recent InsuranceNewsNet article, almost 80% of working Americans feel that it’s important to have a guaranteed source of income in retirement, which is exactly what this new product offers. Potential gains can be experienced during index upswings based on the selection made at purchase. Additionally, clients are protected from index downturns because they will never lose premium due to a drop in index value. 

“As people begin to contemplate how to financially prepare for retirement, a major concern is how to ensure they don’t outlive their retirement assets,” said Dominque Baede, Head of Life and Annuity at Guardian. “The Guardian Secure Index Annuity can be a strategic tool in a client’s retirement strategy by ensuring an ongoing source of income during retirement with the added benefit of potential growth. Creating the opportunity to have retirement assets grow with the added assurance those assets will be available throughout retirement is at the center of how Guardian inspires well-being.”

For a fee, consumers can add the optional Guardian Income Magnifier Rider, which provides the benefit of knowing that the guaranteed income will not decrease for the life of the contract, provided the lifetime withdrawals don’t exceed the Guaranteed Annual Withdrawal Amount (GAWA). This holds true even if the contract value drops to zero. The rider also comes with earning potential and the flexibility to change those protected under it. 

For more information about this, and other annuities, speak with one of our registered agents at 1-866-223-2121. You can also send us an email at support@annuityfyi.com or visit our website, www.annuityfyi.com.

Written by Rachel Summit

Follow Rachel, aka Finance Mama, on Twitter and Facebook

The post Capital Protection and Steady Returns with Reliance Accumulator first appeared on Annuity FYI.