Annuities

If you’ve ever worried about outliving your retirement savings, you’re not alone.

A recent study found that 67 percent of Americans indicated they would be willing to give up smaller pay increases in exchange for steady and reliable income in retirement. In the same study, 78 percent said the disappearance of pensions has made it harder to achieve the American dream.1

With pension offerings on the decline, you may want to consider a fixed income component to your financial strategy. In short, adding an annuity may be an opportunity to help ensure a portion of your retirement income will be guaranteed.

What is an annuity?

An annuity is a contract you purchase from an insurance company. For the premium you pay, you receive certain fixed and/or variable interest crediting options able to compound tax deferred until withdrawn. When you are ready to receive income distributions, this vehicle offers a variety of guaranteed payout options — some even for life.

Most annuities have provisions that allow you to withdraw a percentage of the value of the contract each year up to a certain limit. However, withdrawals will reduce the contract value and the value of any protected benefits. Excess withdrawals above the restricted limit typically incur “surrender charges” within the first five to 15 years of the contract. Because annuities are designed as long-term retirement income vehicles, withdrawals made before age 59 ½ are subject to a 10 percent penalty fee, and all withdrawals may be subject to income taxes.

Annuities are long-term investments designed for retirement planning. Taxes may be due upon withdrawals from the contract. Withdrawals may be subject to a 10% federal penalty tax if made before age 59 ½ and are subject to qualified retirement plan provisions. Withdrawals or surrenders may be subject to contingent deferred sales charges. Withdrawals can reduce the account value and the living and death benefits. Before deciding on an annuity, you should consider your income needs, risk tolerance and investment objectives. Your investment professional can help you decide if annuities are a suitable investment and can help you choose an annuity. Annuity contracts contain exclusions, limitations, reductions of benefits and terms for keeping them in force. Investors should consider the contract and the underlying portfolios' investment objectives, risks, and charges and expenses carefully before investing. Please read the annuity prospectus for more complete information, including all charges and expenses before investing or sending money.

1The National Institute on Retirement Security. “Retirement Security 2015: Roadmap for Policy Makers – Americans’ Views of the Retirement Crisis.” March 2015. 

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