Annuity

Annuities are insurance products designed to help you invest for retirement and provide supplemental income during your retirement.

There are two categories of annuities and each has two types:

Deferred Annuity

Deferred annuity allows you to invest for retirement on a tax-deferred basis. This allows your investment to grow faster without the burden of taxes. There are two types of deferred annuity:

1. A deferred fixed annuity provides you with a guaranteed rate of returns.
2. A deferred variable annuity performance fluctuate based on the performance of the underlying investments and provide you with a potential for superior returns.

Once you are ready to retire, you can convert your deferred annuity into income annuity, which will provide you with a source of guaranteed lifetime income.

Income Annuity

Income annuity allows you to convert a portion of your retirement savings, such as part of your 401k, IRA, and deferred annuity in to a source of guaranteed lifetime income stream. Essentially, you are giving the insurance company a lump sum in exchange for a stream of income until the day you die.

There are two types of deferred annuity:

1. A fixed income annuity provides you with a guaranteed lifetime payments regardless of the stock market and the economy. Some annuity will increase payment by a certain percentage to give you a level of inflation protection.
2. A variable income annuity also provides you with a guaranteed lifetime payments. However, the amount will vary depending on the performance of the annuity. This type of income annuity has the potential to provide you with greater income compared to fixed income annuity.