Income Annuities for Retirement


As options for retirement, you have both income and income annuities.

One job that annuities have is to make sure money is coming in during retirement. Many people have social security or a pension, but it can be a good idea to turn some of your savings into payment that will pay you for the rest of your life. This is known as an income annuity and provides lifetime income guaranteed by an insurance company.

There can be advantages to having an income annuity. If you just keep your income in a savings account and draw money out of it, there is a chance that you will outlive your savings and run out of money. An annuity can guarantee your income for life, regardless of how long you live.

How to go about setting up an annuity:
A great time to set up an annuity is before you retire so that you can give it a chance to grow. This is called a deferred annuity. One good rule of thumb can be to open one between five to ten years prior to your planned retirement.

How do I know if an annuity is right for me?
Some factors to consider when deciding if an annuity is right for you is the combination of your life expectancy, amount of savings and income amount.

Annuity Payments and Types:
There are various types of annuities and different payout options you can choose –

Income annuity with Life Payout – This gives you the highest cash flow/payout and a lifetime income. If you die prior to using all of your cash, payments stop and there is no refund.

Fixed annuity with fixed or refund payments – This annuity offers a fixed rate and no market exposure. If you die prior to using all of your cash, your beneficiary receives the rest.

Variable annuity – This annuity, like all annuities, is a long term investment and the accumulation is based on the performance of investment options.

Annuities are typically paid monthly and are lower for women than for men. Women have a longer life expectancy so the payout is longer and as a result, lower.

There are also options to get an annuity in which your income is guaranteed for your lifetime with a minimum number of payments. For example, if you get an annuity with a payment guarantee of ten years and you die within three years, your beneficiary would receive the rest of your guaranteed payments. There is also a lower payout for this annuity.

First Financial offers annuities and acts as a broker for many different companies. Have questions about investing or you’d like to set up a no-cost consultation with the Investment & Retirement Center located at First Financial Federal Credit Union? Call 732.312.1500. You can also obtain more information on our website at FIRSTFFCU.COM, under the Investment & Retirement tab.

All guarantees are based on the claims-paying ability of the underwriting insurance company. Withdrawals before age 59 1/ 2 may be subject to a 10% federal tax penalty.

Representatives are registered, securities are sold, and investment advisory services offered through CUNA Brokerage Services, Inc. (CBSI), member FINRA/SIPC, a registered broker/dealer and investment advisor, 2000 Heritage Way, Waverly, Iowa 50677, toll-free (866) 512-6109. Non-deposit investment and insurance products are not federally insured, involve investment risk, may lose value and are not obligations of or guaranteed by the financial institution.  CBSI is under contract with the financial institution, through the financial services program, to make securities available to members. FR111123-F058.

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