Annuities 101

Ensuring that your retirement lasts as long as you do

In the past, retirees could typically count on three sources of retirement income that divided roughly into thirds. The three sources of income have traditionally been government funded Social Security, employer-sponsored components and individual savings. With this traditional scenario, both the government and employer-sponsored components of the strategy were considered predictable — reliable income sources that may also be adjusted for inflation, like Social Security benefits. Only one-third of the plan, individual savings, was the responsibility of the individual.

Today, however, due to employer-sponsored plans evolving from guaranteed pension payouts to more defined benefit contribution plans, which generally result in a payout in retirement based upon level of individual participation, the majority of the burden for retirement income seems to have shifted to the individual. For this reason, you may want to consider a guaranteed* fixed income component to your retirement strategy. In short, adding an annuity may be an opportunity to help ensure a portion of your retirement income will be guaranteed*.

An annuity is a contract you purchase from an insurance company. For the premium you pay, you receive certain fixed and/or variable interest crediting options able to compound tax deferred until withdrawn. When you are ready to receive income distributions, this vehicle offers a variety of guaranteed* payout options.

Most annuities have provisions that allow you to withdraw a percentage of the value of the contract each year up to a certain limit. However, withdrawals can reduce the value of the death benefit, and excess withdrawals above the restricted limit typically incur “surrender charges” within the first five to fifteen years of the contract. Withdrawals will reduce the contract value and the value of any protection benefits, and because they are designed as a long-term retirement income vehicle, annuity withdrawals made before age 59½ are subject to a 10 percent penalty fee, and all withdrawals may be subject to income taxes.

Is an annuity the right choice for me?

At Drew Capital Group, we work one-on-one with individuals to create a complete, 360-degree view of your financial landscape, including how your retirement assets are integrated and work with one another.

We would love to discuss your future needs and how they can align with your current assets. Call us for a free consultation today at 833-DREWCAP or visit us at www.drewcapitalgroup.com.

*Guarantees are backed by the financial strength and claims-paying ability of the issuing company and may be subject to restrictions, limitations or early withdrawal fees. Annuities are not FDIC insured.