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An annuity is a type of investment that allows you to pay money now in exchange for a stream of income in the future.

Is an annuity right for me? Here are the facts:

  • Annuities are a great way to guarantee income after retirement, as they typically provide a source of revenue to the beneficiary until the time of their death. In some cases, an annuity will even pay death benefits to designated recipients, such as surviving family members, for a fixed period after the annuity holder’s death.
  • An annuity can either be fixed or variable; and will be either immediate or deferred. A fixed annuity guarantees a specific amount of income that will kick in after a certain period of time, while a variable annuity offers the possibility of greater rewards, but does not come with any guarantees. An immediate annuity provides an immediate and guaranteed long-term income source beginning soon after purchase. A deferred annuity has an accumulation phase during which the contributions grow before payments from the income source begin.
  • An annuity can offer significant tax benefits, as it is often possible to defer tax payments on the money you invest in one.

Variable annuities are long-term investment vehicles that involve certain risks, including possible loss of the principal amount invested. The investment return and principal value may fluctuate so that the investment, when redeemed, may be worth more or less than original cost. Withdrawals of taxable amounts will be subject to ordinary income tax and possible mandatory federal income tax withholding. If withdrawals are taken prior to age 59½, a 10% IRS penalty may also apply. Withdrawals affect the variable annuity's death benefit, cash surrender value and any living benefit and may also be subject to a contingent deferred sales charge. There are inherent risks involved with investing in mutual funds. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Past performance is not a guarantee of future results.

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