Annuities can be powerful retirement vehicles because they can accumulate value on a tax-deferred basis or can be a source of lifetime income for retirement, or the realization of other financial goals.

Annuities provide a regular stream of income, typically upon retirement. They can be shaped and sized according to your needs and give you the option to begin receiving the income at a future date or immediately. You can fund your annuity gradually or all at once. Depending on the type of annuity, its value can be tied to a fixed interest rate or the performance of underlying investment funds.

You can arrange:

  • for the annuity to provide an income for a specific period of time or an entire lifetime.
  • for the income you receive paid from a fixed income plan or variable income plan that is tied to the performance of underlying investment funds.
  • to have the annuity provide income to you alone, to you and a significant other, to continue to whichever of you lives the longest, and even to another beneficiary beyond the lifetime of you and any significant other.

There are different types of annuities.

Deferred Annuity

A deferred annuity is a long-term investment designed to help you grow your assets and provide a steady income stream for your retirement. Basically, that means you invest your money now and hold off on using it until you’re ready to retire. You get to invest on a tax-deferred basis, so you don’t pay taxes on any accumulated earnings until you withdraw your money. And then, only your earnings are taxed as ordinary income.

Immediate Annuity

The primary benefits of an immediate annuity are the consistent and stable income it provides. You know that a check for a specific amount will be received on a regular basis and that the income will continue for as long as you have requested. An immediate annuity is sometimes referred to as an income annuity.

Both deferred and immediate annuities offer fixed or variable income options.

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