What is a Fixed Annuity?

A fixed annuity provides a guaranteed income for investors, for retirement. You make payments to an annuity company, which then promises to pay you a fixed return on your contributions no matter how the market changes and fluctuates.  

Fixed annuities offer a simple and dependable source of investment income for your retirement plan. You can choose to receive guaranteed payments for a specific number of years (or life) or you can get it in one lump sum; just depends on your policy.

One major attraction for fixed annuities is that they offer stability and predictability.

While simplicity, guaranteed returns and predictability are the advantages of a fixed annuity, there are some disadvantages.

While a fixed annuity does not get affected by market loss, it also doesn’t get affected by market gains. Inflation could hurt your returns. When the economy is experiencing high inflation, it may not grow quickly enough to keep up with inflation.

Unlike some tax-advantaged retirement accounts, any withdrawals from a fixed annuities can be taxed; even if they are funded by money that you have already paid taxes on.

If you buy your fixed annuity from an insurance company or a bank or another place, what happens if the company you purchased it from goes bankrupt? The state government has insurance funds that cover annuities and like products. The fund would reimburse you for the value of your annuity (upon limits by your respective state).

There are many fixed annuity options to choose from and you need to consider what works best for you. You might even want to speak to an advisor you can trust and who will understand your needs.    

Call Jim Rooney at Advanced Insurance Concepts. He work with a variety of insurance companies in Missouri and Kansas. He is licensed to sell Health, Life and Accident Insurance, so call Jim Rooney for all your insurance needs.