What is an annuity? Part one of Jackson’s three part series explains what a variable annuity is and how it can help you on your retirement journey.
Variable annuities are long-term, tax-deferred investments designed for retirement, involve investment risks and may lose value. Earnings are taxable as ordinary income when distributed. Individuals may be subject to a 10% additional tax for withdrawals before age 59½ unless an exception to the tax is met. Add-on benefits* available for an extra charge in addition to the ongoing fees and expenses of the variable annuity, can also provide protection and legacy options.
Let's talk about Variable Annuities
Want to know how to grow assets, receive income, and protect a portion of your portfolio? When you meet with your financial professional, ask about a variable annuity and how this product might fit into your retirement plan.
Ask about protection.
In a volatile market, protection of retirement assets is an important conversation to have with your financial professional. First, consider: What are you protecting? It’s a simple question—and very important to ask. Beyond necessities such as your home, business, or car, there is also your financial portfolio. What risks do you need to protect your portfolio against?
- Longevity: How long you will live and need income.
- Inflation: How much your nest egg will be worth in the future compared to now.
- Volatility: How market fluctuations can impact your savings.
Ask about income.
Especially as lifespans increase, potentially running out of money is a concern for many retirees. One way to reduce this risk is by increasing your protected lifetime income. A variable annuity can be used as a tool to help bridge the gap between how much money you have and how much you’ll need in retirement. It is called a variable annuity because the payments you receive can vary based on the performance of the underlying investments.
Many variable annuities offer optional add-on benefits, available for an additional cost, that can offer protection against market volatility and provide guaranteed income for life. In fact, a variable annuity can provide a guaranteed amount of income each month for a set period, or for life—even if the amount paid out is greater than the value of the contract. The amount of income these benefits may provide can vary depending on the age when the income begins and how many lives are covered when the benefit is elected—for instance a couple versus an individual. The cost of these benefits may negatively impact the contract’s cash value.
Ask about growth.
A variable annuity enables you to spread your wealth across a wide range of investment options which may help grow your assets on a tax-deferred basis†. That means you won’t pay ordinary income tax on earnings until you start withdrawing from the contract. You can also safeguard what matters most with a range of death benefit options designed to prepare your legacy wishes and protect your loved ones.
If you want to know more about the potential of a variable annuity, all you have to do is ask. Start the conversation with your financial professional.