Fixed Annuity

Do you consider yourself a conservative investor? Are you at a place in life where you feel you cannot afford to take any risk? If so, a fixed annuity may be the perfect vehicle for you.

Often this is referred to as a ‘tax-deferred’ annuity, because no taxes are ever paid on the earnings until a withdrawal is made. Through the power of tax deferred compounding, you are able to save for retirement. With a fixed annuity, you are able to benefit from the power of compounding earnings.

There are three types of fixed annuities; CD annuities, traditional fixed annuities, and immediate annuities.

With a CD annuity, you are able to receive a guaranteed interest rate for a period of time. During this period of time your interest rate will remain the same.

With traditional fixed annuities, your interest rate earned will change, or ‘reset’ each year. Even though this rate of return changes each year and some years may be more profitable than others, the insurance company will offer what is called a ‘guarantee rate of return’.

Finally, with immediate annuities, you will begin immediately earning a set amount of money and this income stream will last for a period of time. This period could be for 10 or 20 years, or it could be until death. Those near retirement who have a lump sum of money that they wish to convert into a monthly, guaranteed income could benefit from this type of annuity.