Randy Eschels photo

Randy Eschels, CLU, ChFC, CFP®

 

Eschels Financial Group, Inc.

555 S Old Woodward Avenue, Suite 612

Birmingham, MI 48009

 

Phone:  248-644-1144

             800-969-9990

Fax:      248-644-7820 

 

Email: randy@eschelsfinancial.net

Website: www.efg-ida.com

May/June 2020

Annuities for Longer Life

Annuities for Longer Life

Fewer Americans can count on a guaranteed retirement income these days other than social security benefits, which are little more than a safety net. A fixed annuity* can help offer this certainty, but some financial consumers don’t want to tie up all of their retirement money in one place. For these people, converting a portion of 401(k) plan or IRA balances to a fixed annuity may make more sense. There are a couple of ways to do this.


A Matter of Time
Annuity income payments can begin in one of two ways. An immediate annuity begins payments to you immediately, as its name implies, and a deferred annuity begins paying you at a future date. You get the annuity’s guaranteed interest rate credited to your account balance during the accumulation phase, then receive a fixed income payment based on the rate, when payments begin, and the length of the annuity contract.

Varied Options
Because time is so important, how and when you structure your annuity payments will matter, with longer terms resulting in lower periodic payments. So you might buy an immediate annuity by partially converting other retirement money, leaving open the possibility of converting more at a later date if needed. Or you might purchase a deferred annuity that begins payments in 10 or more years, increasing the accumulation phase and reducing the payment term. You can use other money to purchase a deferred annuity at any time, even long before retirement, giving your annuity more time to potentially grow.


Annuities are complicated, but they can help improve your financial readiness in retirement. Work with an insurance professional who can help you make the appropriate choice.


*Fixed annuity contracts guarantee a minimum credited interest. For immediate fixed annuity contracts, annuitants receive a fixed income stream based, in part, on the interest rate guarantee at the time of purchase. Annuity products are not FDIC-insured, and their contract guarantees are backed solely by the claims-paying ability and strength of the issuing life insurance company. Withdrawals prior to age 59 ½ may result in a 10% federal tax penalty, in addition to any ordinary income tax.


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