Guaranteed Basic Income
Guaranteed* Basic Income In Retirement
With a fixed index annuity (FIA), you can receive a guaranteed basic income, for life. An annuity is a contract with an insurance company. You put money into an FIA or fixed annuity, and your money eventually converts into set payments. You can take these payments after a surrender period. Your income is therefore promised by the insurance company. Typically, people begin withdrawing after age 60, but this may vary. Delaying your payments might mean your income amount is larger. Another big benefit: your principal balance has protection from market loss.
What Is an Annuity Pay Out?
With a fixed annuity as well as an FIA, you get a series of set payments. This happens over a particular interval. Some FIAs also offer other benefits, including income riders and death benefits. For instance, an income rider allows you to increase your income amount from the annuity as costs rise. For many retirees, they use this benefit to stay ahead of inflation and other increasing living expenses.
Of course, there are limitations when it comes to income riders. First, not all policies will offer them. Secondly, some situations may not warrant the use of this income rider benefit. It is important to understand all costs that come along with these benefits, too. Dan Orfin and his team are more than happy to review your options with you. We are here to answer questions and help you find a guaranteed basic income that’s right for you.
Taking income from an annuity may also impact your taxes. For instance, taking money from retirement accounts too early could create a 10% federal tax. For the most part, fixed annuities and FIAs are tax-deferred until you withdraw money. However, contact us to learn specifics about your accounts and situation.
Money When You Need It
Annuity contracts have several benefits. One of the biggest is that the insurance company protects your money from stock market risk. If the market drops, they take the risk, not you. Also, there are potential benefits for loved ones left behind, as well. Typically, annuity death benefits are not subject to probate.
Number of Years
Usually, people select an annuity with a 5-10 year accumulation period. If you follow the terms in your contract, you will not pay surrender charges. In addition, you may get interest credits on your account. Those will have safety as well. Also, you could choose a longer time period, such as 15 or 20 years. Sometimes people do this if they do not need the money for income. Some products offer a slightly higher interest rate if you choose a longer timeframe. However, you should keep your goals in mind. If an FIA or fixed annuity is being used for retirement income, your strategy may differ.
How Much You Get
There is some control in terms of how much money you take from your annuity. In the initial phase of “growth”, you don’t take income. However, after that term is up, your income payments may begin. Your annuity agreement will lay out the details. Talk with us about guaranteed basic income options in retirement.
How Often You Take Income
You have a few choices in terms of how often you take income from your annuity. For example, some retirees choice to annualize their payments. Others select a monthly income. In addition, you may have the option of annuitization payments. In this case, some of your payments might be considered a refund of your annuity premium. Therefore, there may be some tax advantages. Consult with a tax advisor about any specific tax-related questions.
Your Life And More
With most pensions, the death benefits have limits. Usually, only spouses get income once the main pension holder passes away. However, an FIA or fixed index annuity may have a death benefit option. In this way, your loved one might get payments in one lump sum or monthly, over time.
*Backed by the claims-paying ability of the carrier