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

Gov. Brown Appoints New Public Utility Commissioners to Replace Florio and Sandoval

Martha Guzman Aceves and Clifford Rechtschaffen both come from the governor’s office with strong environmental protection backgrounds. Martha …

Published: December 31, 2016 - 10:14 am @ https://www.greentechmedia.com/articles/read/gov.-…

Kerry’s Blunt Words for Israel Denounced by Lawmakers in Both Parties

A bipartisan chorus of lawmakers, upset with President Obama’s decision last week to allow the passage of a United Nations resolution condemni…

Published: December 31, 2016 - 10:14 am @ http://www.nytimes.com/2016/12/28/us/politics/john…

Obama preparing to penalize Russia for hacking

WASHINGTON — The Obama administration is preparing to penalize Russia over the hacking of Democratic officials during this year's presidential…

Published: December 31, 2016 - 10:16 am @ http://www.usatoday.com/story/news/politics/2016/1…

Mail truck tips on Mesa street

MESA, Ariz. - A mail truck ended up on its side in a crash Wednesday. Mesa police say a single-vehicle collision left the United States Postal…

Published: December 31, 2016 - 10:12 am @ http://www.12news.com/news/local/valley/mail-truck…

Reports of mall disturbances light up social media

A flurry of reports of mall melees and disturbances rippled across social media Monday on a day Americans swarmed shopping hubs for post-holid…

Published: December 31, 2016 - 9:51 am @ http://www.usatoday.com/story/news/nation/2016/12/…

Graham, McCain want Russia sanctions after election hacking

Top Republican senators said Wednesday that the incoming Congress and President-elect Donald Trump should impose new and tougher sanctions on …

Published: December 31, 2016 - 9:13 am @ http://www.foxnews.com/politics/2016/12/28/graham-…

Immigration Is the Only Hope for States That Helped Trump

The decline of manufacturing does not explain the decline of Wisconsin. Photographer: Daniel Acker/BloombergFacebook Twitter Email Print Share…

Published: December 31, 2016 - 7:17 am @ https://www.bloomberg.com/view/articles/2016-12-28…

Creator of the Red Solo Cup dies at 84

FOX 32 NEWS - The creator of the Red Solo Cup died on Wednesday, December 21, 2016 at the age of 84. Robert Leo Hulseman lived in Northfield, …

Published: December 31, 2016 - 7:07 am @ http://www.fox4news.com/trending/225996868-story

12 Cars You Can Legally Import to the US in 2017

slide-4320347 There were plenty of great vehicles produced abroad that Americans (outside of Canada) haven't been able to import until they hi…

Published: December 31, 2016 - 7:06 am @ http://www.autoblog.com/photos/cars-you-can-legall…

Raw sewage bubbles out of ground, Mesa apartment residents fed up

MESA, AZ - People who live at one apartment complex in Mesa said they have a problem that stinks — raw sewage bubbling up out of the ground an…

Published: December 31, 2016 - 6:35 am @ http://www.abc15.com/news/region-southeast-valley/…

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…