Safe Harbor Retirement Group

What is an Annuity

What is an Annuity

An annuity is a contract with an insurance company that may promise a certain level of income for life.

How it works: You pay money into the insurance company; in return you receive an income stream specified by the contract. Alternatively, you may elect not to take periodic income payments – enabling interest to accumulate within the annuity – and then withdraw a lump sum at the end of the contract period.

The tax benefit: Money grows tax-deferred within the annuity, meaning you pay no tax on the earnings until you take them out. And unlike 401(k)s and IRAs, there is no annual limit on the amount you can put in an annuity.

An annuity is an insurance product you can buy to seek the following benefits:

  1. Generate lifetime income
    An annuity is a type of financial vehicle that can include a predictable income for as long as you live.

  2. Grow tax-deferred retirement savings
    Annuities provide a way to grow your money, tax deferred, both before and during retirement. A fixed indexed annuity typically earns interest based on the movement of a market index, like the S&P 500. This allows you to earn interest based on market performance, but you will not lose interest credits if the market index declines.

  3. Provide a legacy to your heir
    Beyond income that lasts for your lifetime, an annuity can help assure there’s money to leave to loved ones.

Contact us for a complimentary, no obligation meeting where we will answer all of your questions and find out if an annuity makes sense for you!