Annuities 101: Understanding the Basics of Guaranteed Income for Life

Planning for your golden years can be a complicated and even intimidating proposition. Still, securing proper assets and savings is a necessary task to which you must devote ample time and attention. Without appropriate plans, you might lack the means to maintain a good quality of life and access essential care and resources as you age. Annuities can play a key role in your plans.

What Are Annuities?

Annuities can generally be seen as investments capable of securing a reliable and consistent income stream in the future. These financial instruments are often sold by life insurance companies and may couple with other savings, such as 401k plans and individual retirement accounts, to provide for you after you retire and require a subsidized income.

How Do They Work?

When you purchase an annuity, you make an investment in your future. Your payments can be tucked away for future use, often while potentially growing and accruing tax-advantaged value. Through a process called annuitization, you can eventually cash out your investments, which will then pay out in a stream of regular installments through a fixed period or even the remainder of your lifespan.

Which Annuities Are Right for Me?

Annuities may come in many forms. Consider the following common types and how each may help fulfill different financial goals:

• Fixed annuities are relatively low-risk investments and typically include a guaranteed minimum interest rate while never losing value over time.

• Variable annuities are more aggressive options directly tied to market conditions and may, therefore, have greater growth potential, albeit in exchange for higher risk.

• Indexed annuities may provide a middle ground between the aforementioned types, including a guaranteed growth rate and ties to an underlying index (e.g., the S&P 500).

We’re Here to Help

Contact Active Insurance Agency in Brighton, Michigan, today to learn more about annuities and begin building and fortifying your financial future.

This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.