Annuities are tax deferred savings and investment products that offer additional options for your retirement planning. They can convert your assets into a lifetime income source. They guarantee a steady stream of income that retirees can't outlive, and we find they can be a valuable tool for certain individuals.

There are many annuity products on the market with assorted features and I can help you determine the best choices to match your goals and personal circumstances. Based on your particular situation, I will advise whether annuities are a good choice for you. We help you understand your options, the advantages and disadvantages of each type of annuity, and how annuities can fit within your overall financial plan.

Advantages of Annuities

All annuities have three primary advantages: Tax Deferral, Avoidance of Probate, and a Guaranteed Income (optional) for a fixed period of time, or income for life. Other reasons to invest in fixed, fixed index and immediate annuities:

  • You need tax-deferred growth
  • You need your principal and interest guaranteed
  • You need your heirs to avoid probate upon your death
  • You need stock-market linked gains without the downside risk

Reasons for Buying Fixed Annuities

Annuities can provide an incredible safety net. Older investors are particularly drawn to annuities as the threat of outliving their money from retirement accounts is a significant risk. Annuities can provide a guaranteed income stream for life, along with guarantee of principal. Think of the annuity as your basement. Laying that foundation will guarantee you have the money to make sure living expenses are met.

Life expectancy for both men and women has increased dramatically of the last 40 years. Annuities are really the only investments that provide options for guaranteed income, a guaranteed return or a guarantee of the Principal.

Features of Fixed Annuities

Fixed annuities are investment vehicles that are structured much like a bank CD. As with a CD, fixed annuities offer an interest rate over time, but also include tax benefits geared specifically towards retirement savings. Once the initial deposit is made, an interest rate is guaranteed for a specific length of time (typically 1-10 years). Minimum premium usually start at $5,000. Other benefits of fixed annuities are safety of principal, more liquidity than CDs and typically offer higher rate of return than bonds, CDs, or treasuries.

Fixed annuities are typically split into two categories: immediate and deferred. With deferred annuities, pay outs will not begin until the end of the contract term (1-10 years), compounding interest much like any typical savings investment. Immediate fixed annuities start issuing monthly payments right away, and can be structured to pay out over a set amount of time or the investor’s life expectancy.

Features of Equity (or Fixed) Indexed Annuities (FIA)

Equity Indexed Annuities (also referred as Fixed Indexed Annuities) are a type of tax-deferred annuity whose credited interest is linked to an equity index; typically the S&P 500. An equity indexed annuity guarantees a minimum interest rate, while also having the potential to participate in a portion of the market's upside growth. The returns may be higher than fixed instruments such as CDs, money market accounts, and bonds but not as high as market returns.

Call 973-285-1040 or email me today to schedule a no-obligation consultation to discuss if annuities make sense for incorporation into your retirement plan.



Morristown Office

163 Madison Avenue Suite 220
Morristown, NJ 07960

Phone: 973-285-1040
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