Broker Check


Annuities offer flexible payout options that can help retirees meet their cash-flow needs and provide many benefits for retirement investors. One of the most appealing benefits of an annuity is the option for a guaranteed lifetime income stream.

Annuities are contracts issued by insurance companies. All annuity guarantees are based on the claims paying ability of the issuing insurance company.

Of course, there are contract limitations, fees, and charges associated with annuities, which can include mortality and expense risk charges, sales and surrender charges, administrative fees, and charges for optional benefits. Surrender charges may apply during the contract’s early years in the event that the contract owner surrenders the annuity.

Tax deferral is another benefit, as well as the ability to put large sums of money into an annuity. You may place more money in an annuity, tax-deferred, than is allowed annually in a 401(k) plan or an IRA. You may do this all at once or over a period of time.

Annuities also offer a death benefit whereby the beneficiary will receive a death benefit at least equal to the net premiums paid into the annuity by the owner before death. And since annuities have a beneficiary designation, they can help avoid probate. Upon your death the beneficiaries will receive the annuity proceeds without time delays and probate expenses.

When you purchase an annuity, your annuity grows tax deferred until you start taking withdrawals. Distributions of earnings are taxed as ordinary income and may be subject to an additional 10% federal income tax penalty if taken prior to reaching age 59 1/2.

Fixed Annuities

Fixed annuities pay a fixed rate that can start right away (with an immediate fixed annuity) or at a future date (with a deferred fixed annuity). Although the rate on a fixed annuity may fluctuate, it will never fall below a guaranteed minimum rate specified in the annuity contract.

Variable Annuities

A variable annuity is a long-term tax-deferred retirement vehicle that allows you to choose from a selection of investments. Most variable annuities offer you a basic contract with features already built in. The basic benefits include (but aren’t limited to): terminal illness rider, nursing home rider, liquidity (usually 10% of the purchase amount annually available), standard death benefits and of course tax deferral. They also offer optional living benefits or “living benefit riders” which are additional guarantees you can purchase for a fee, on top of the standard benefits of the contract. These living benefits can guarantee a lifetime income stream for you or a return of premium. All guarantees are based on the claim’s paying ability of the issuing insurance company.

Variable annuities are sold by prospectus. Consider the investment objectives, risks, and charges and expenses of the variable annuity carefully before investing.

Equity Index Annuities

An equity-indexed annuity is an annuity that earns interest that is linked to a stock or other equity index. One of the more common indexes is the S & P 500. They are different from fixed annuities because of the way it credits interest to your annuity contract. Most fixed annuities credit interest at a set rate. Equity-indexed annuities credit interest using a formula based on changes in the index (for example in the S & P 500 index) to which the annuity is linked. The formula decides how the additional interest, if any, is calculated and credited. The main benefit of an equity-indexed annuity is that when the index declines, the interest rate that is credited to your annuity is zero.

While the return is based on the performance of the index, you do not get the full benefit in a rising market. Be aware that a participation rate, asset fee, or interest rate cap are some of the features used by indexed annuities to determine how much potential gain will be credited to the annuity. These features may change annually, so investors must carefully evaluate a contract to evaluate these factors that can affect the investment return.

Should an annuity be part of your retirement strategy? Call Shelly Dodge at 972/539-0002 today to schedule a complimentary consultation to review your financial goals and discuss your various retirement options.

Annuities are long-term investments. Guarantees are subject to the claims paying ability of the issuing insurance company. Annuities contain mortality, expense charges, account fees, management and administrative fees, and charges for features and riders. Additional fees apply for living-benefit options. Investment restrictions may also apply for all living benefit options. Violating the terms and conditions of the annuity contract may void guarantees.

Most annuities have surrender charges that are assessed during the early years of the contract if the contract owner surrenders the annuity.

Find Your Perfect Fit

Thank you!