Fixed annuities are insurance products that protect against loss and typically offer set rates of return. They present less risk than variable annuities and can provide a stable flow of retirement income.
Before you decide whether a fixed annuity is best for you, consider how it works and how it compares to other annuities.
What Is a Fixed Annuity?
A fixed annuity is a contract that gives you a way to save money in the long run, allowing interest to accrue tax deferred.
You pay for a stable flow of income. The insurance carrier guarantees your capital and a minimum interest rate.
How Do Fixed Annuities Work?
How the money grows will be laid out in your contract. It may grow by a specified dollar amount, an interest rate, or by another method explained in the contract. Unlike indexed and variable annuities, there’s no connection between fixed annuities and the performance of an investment portfolio.
A fixed annuity can be immediate or delayed. This means that after you buy one, you can start getting payments within a year or you can have the payments begin at a later date. Deferred annuities normally start payments upon retirement.
Income payments can be guaranteed for life or for a determined number of years, depending on the contract’s terms. You may also choose to get it in a lump sum.
The Benefits of Fixed Annuities
Fixed annuities are the simplest type of annuities. They also provide the most dependable income stream, typically with the lowest fees. Here are the pros:
- Simple: There’s no complex formulas for dictating the amount you’ll get in income payments.
- Predictable: You have a steady reward regardless of how the market performs. You know what to expect.
- Lowest risk: You don’t have to stress about losing money when stocks underperform.
As a retiree, the low risk factor is essential. You can’t afford to lose the money you need to pay living expenses.
What Else You Should Know
Your fixed annuity contract will have a minimum guaranteed rate. The guarantee is the principal investment and that the interest will not fall below that rate. Overall, annuity funds are regulated by state insurance commissions.
Fixed annuities are one of the few types of annuities you can buy through our insurance agents. Ask us about variable annuities and indexed annuities.
Learn More About Fixed Annuities
Discover how an investment today can bring guaranteed income for life. Call (316) 260-3331 to purchase an annuity through Cornerstone Senior Advisors.