Special Report - The Changing Face of Annuities Today

According to the U.S. Department of Treasury, as of March, 2000, Social Security covered about 38%* of the income we needed for retirement. That meant we had to come up with the other 62%, either through an employer-sponsored pension program, personal savings or both. Today, just eight short years later, I feel and think you would agree, it would be great news if they covered just that same 38% and who can say with any certainty where these numbers will be in future years.

To help prepare for this uncertain future, scores of informed people like yourself are purchasing annuities as a source of additional retirement income so they can sleep at night knowing they now have a guaranteed income and Can No Longer Risk Outliving their Retirement Savings!

So What is an Annuity and What is so Different Today?

With single premium annuities, you make only one purchase payment. That money then grows tax-deferred until you are ready to begin receiving income payments. These annuities are especially useful if you receive an inheritance or a lump sum of money from a retirement plan.

With flexible premium annuities, you make a series of payments over time-usually as much as you wish whenever you wish, within certain limits. As a rule, the more money you put in and the sooner you begin, the more the annuity can earn for you. Why purchase a fixed annuity?

An annuity is one of the safest methods of accumulating money for retirement and/or other long-term needs. It features tax-deferred growth, guaranteed minimum interest rates. Some will provide a guaranteed income you can not outlive, while retaining access and full control of your money, without annuitization. There are even some that give you checkbook access to you account value. No waiting for your money!

As a Professional I feel a Word of Caution is Needed Here... Annuities are not right for everyone!

Annuities are for your long term savings goals only and should not include monies you need for everyday living expenses or foreseeable planned needs, such as vacations, a new car, home repairs and the like. Remember that's what your Passbook Savings is for! A prudent saver never puts all his eggs in one basket... Not even in the one great big safe basket.

Fixed indexed annuity products (FIA's) even allow you to share in the growth of a market index (S&P 500, Dow Jones Industrial Average, Lehman Brothers US Aggregate, etc.) without sharing in any of the losses inherent to the market. This allows your money to grow at even faster rate and may be right for those who enjoy watching and/or participating in the stock market, but without the risks associated with the volatile stock market itself.

When set up properly, annuities can even provide protection for your family, as it may avoid the costly and time consuming delays of probate when passed on to your heirs.

How does an annuity work?

1. You make a contribution (known as a premium or purchase payment);
2. Interest accumulates on a tax-deferred basis;
3. The annuity grows; and
4. At maturity, you withdraw your funds through a distribution method that best meets your needs.

Now please remember, with other savings alternatives, interest earnings are taxable each year, reducing your interest gains each and every year. Alternatively, at the present time with an annuity, you pay no taxes on your earnings until you begin withdrawing funds...so your money grows faster. What's more, in addition to earning interest on your premium, the earnings on your premium also earn interest for you. Plus, the money you don't pay out in current taxes earns additional interest for you each and every year into the future. This is what is commonly referred to as the "Triple Compounding Effect" of annuities!

These features work to your advantage when building a secure nest egg. And, the sooner you get started, the more prepared you'll be for those golden years!

To determine the annuity or combination of annuities that best fits your needs, and for complete details of coverage including limitations, reductions or changes, Contact a Licensed Financial Professional in your area. For those of you lucky enough to be living in Pennsylvania, Ohio and West Virginia, Simply contact our office and schedule a convenient time we might to get together where we can explore your individual needs and concerns.

Keywords: