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.

Fixed annuities and FIAs are tax-deferred until you withdraw money. Please contact us to learn specifics about your current strategies.

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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.

Your Choices

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 annuity contract. 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 “accumulation”, 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.

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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 professional 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.

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