Need to boost retirement income? Consider variable annuities - Ahwatukee Foothills News: Money

default avatar
Welcome to the site! Login or Signup below.
|
||
Logout|My Dashboard

Need to boost retirement income? Consider variable annuities

Print
Font Size:
Default font size
Larger font size

Related Stories

Posted: Wednesday, May 1, 2013 10:49 am

Here’s a sobering statistic: 46 percent of workers surveyed had little or no confidence that they will have enough money to live comfortably throughout their retirement years, according to the 2010 Retirement Confidence Survey, issued by the Employee Benefit Research Institute. So you may want to explore all possible retirement savings vehicles —including a variable annuity.

Generally speaking, when saving for retirement, it’s a good idea to contribute as much as possible to your IRA and your 401(k) or other employer-sponsored retirement plan. But if you’ve fully funded those plans for the year, and you still have some money left to invest, you may want to consider a variable annuity, which offers these benefits:

• Tax deferred earnings. Your variable annuity’s earnings have the opportunity to grow tax-deferred, which means your investment dollars can accumulate faster than if they were placed in an investment on which you paid taxes every year. When you eventually make withdrawals, your earnings will be taxed at your ordinary income tax rate (for non-qualified annuities, you won’t have to pay additional taxes on the amount you contributed). There are no tax advantages to investing in a variable annuity with qualified money.

• Variety of investment options offer diversification. Variable annuities allow individuals to invest in several different professionally managed investments, known as “subaccounts.” You can choose the sub accounts that best fit your risk tolerance, time horizon and long-term objectives. Keep in mind, though, that diversification does not guarantee a profit or protect against a loss.

• No contribution limits. Each year, you can contribute far more to a variable annuity than you can to your 401(k) and your IRA. In fact, you can contribute virtually unlimited amounts to your annuity.

• Payout flexibility. A variable annuity provides you with flexibility in gaining access to your money. You could, for instance, collect a lump sum. But you might find it more advantageous to take your payments over a specified number of years. You could even choose to receive a lifetime income stream.

• Guaranteed death benefit. If you die, your beneficiary is usually guaranteed the amount originally invested, minus previous withdrawals. Some variable annuities offer death benefit options, which may increase the death benefit over time. Guarantees are based on the claims-paying ability of the issuing insurance company.

While variable annuities do offer some key advantages, there are also some considerations to discuss with your financial advisor before investing. For one thing, variable annuities are not suitable for everyone. A variable annuity is unquestionably a long-term investment. In fact, you may be assessed a surrender charge if you pull money out of the contract within the first several years after you purchase it. However, some variable annuities allow you to withdraw a portion of your investment, such as 10 percent of your purchase payments without incurring a surrender charge, while others allow full withdrawals. Another point to keep in mind is that if you tap into your annuity before you reach age 59 1/2, you may be hit with a 10 percent early withdrawal penalty.

One final note: A variable annuity is just that — variable. The value of your annuity will go up and down, based on what’s happening in the financial markets, and there’s no guarantee that your annuity won’t lose principal. Also, variable annuities vary greatly in their terms, features and fees, so, before investing, you’d better shop around. Consult with your financial advisor to determine which variable annuity is most appropriate for your needs. Ultimately, though, you may well find that a variable annuity may be the final piece to your retirement income puzzle.

• This article was written by Edward Jones for use by Ahwatukee Foothills Edward Jones Financial Advisor Joseph B. Ortiz, AAMS, CRPS. Reach him at (480) 753-7664 or joseph.ortiz@edwardjones.com. Accredited Asset Management Specialist and AAMS, Chartered Retirement Plans Specialist and CRPS are registered service marks of the College for Financial Planning.

More about

More about

More about

  • Discuss

Dark smoke hangs over scenic stretch of California coast

Previous Next The blaze that has destroyed 20 homes was burning inland over a ridge and was not for the most part visible on the Pacific Coast…

Published: July 27, 2016 - 2:17 pm @ http://www.foxnews.com/us/2016/07/27/dark-smoke-ha…

Gunman Barricaded at Senior Center In Tempe, Arizona; SWAT on Scene

ARIZONA — Police In Tempe, Arizona were responding to an active shooter and barricade incident at the Westchester Senior Center Wednesday. The…

Published: July 27, 2016 - 1:53 pm @ http://breaking911.com/breaking-active-shooter-at-…

Colorful Destinations Around the World

Lavender paints a field purple in Provence, France. The apex of the Dome of the Rock shrine glints gold in Jerusalem, Israel. The red rocks of…

Published: July 27, 2016 - 1:49 pm @ http://www.nationalgeographic.com/travel/travel-in…

Mediterranean Diet for Brain Health

advertisement Find more information on Dr. Weil and integrative medicine. DrWeil.com The premiere resource for in-depth, timely, trustworthy i…

Published: July 27, 2016 - 1:23 pm @ http://www.drweilblog.com/home/2016/7/27/mediterra…

Arizona Cardinals sign veteran linebacker Donald Butler

The Arizona Cardinals have added some linebacker depth just one day before training camp is set to begin. The Cards announced Wednesday that t…

Published: July 27, 2016 - 1:19 pm @ http://www.abc15.com/sports/sports-blogs-local/ari…

US Aid Chief Asks Security Council to Support Pauses in Syrian Fighting

Print Syrian Fighters Seize Half of Manbij From Islamic State Syrian Government Airstrikes Hit 5 Clinics in Rebel-held Areas The United Nation…

Published: July 27, 2016 - 1:21 pm @ http://www.voanews.com/content/un-aid-chief-asks-s…

Suns Announce Complete 2016-17 Coaching Staff

The Phoenix Suns announced Head Coach Earl Watson’s coaching staff on Wednesday, naming Jay Triano associate head coach, Tyrone Corbin and Nat…

Published: July 27, 2016 - 1:17 pm @ http://www.nba.com/suns/press-release/suns-announc…

How to Stay Cool in Metro Phoenix This Summer

Becky Bartkowski A A In New Times' 2016 summer guide, we're all about keeping cool — from eating and drinking to staycationing. Here's your gu…

Published: July 27, 2016 - 12:49 pm @ http://www.phoenixnewtimes.com/arts/how-to-stay-co…

BLOG: Jared Dudley's passion for Phoenix a breath of fresh air compared to Stoudemire's disrespect

Within a 24-hour period, Phoenix Suns fans have witnessed the epitome of class from one of their favorite players and a complete lack of class…

Published: July 27, 2016 - 12:49 pm @ http://www.abc15.com/sports/sports-blogs-local/blo…

Fed up after 5 months without pay, public servant quits job in disgust

A public servant is enraged she had to quit her job and pull her daughter out of full-day daycare because the government didn't pay her salary…

Published: July 27, 2016 - 12:49 pm @ http://www.cbc.ca/news/canada/ottawa/phoenix-payda…

Facebook

ahwatukee.com on Facebook

Twitter

ahwatukee.com on Twitter

RSS

Subscribe to ahwatukee.com via RSS

RSS Feeds

Spacer4px

Most Popular

Online poll

Loading…