Guido D. Aloisi
Missouri Fixed Annuities
An annuity is a financial product that can be purchased by you from an insurance company. The product accumulates value on a tax free basis making the growth more rapid than a taxable type product. You only pay tax when you start withdrawing money, not before. Annuities are the only products that can provide a guaranteed life income.
Annuities come in several forms
Traditional deferred annuity has a fixed rate of interest on the deposit, for a fixed period of time, and is guaranteed.
Equity index annuity has no risk to principal and the possibility of stock market induced gains. Sounds complicated but is a fairly simple concept. The insurance company guarantees your principle will not drop even if the market does. However if the market rises the insurance company will share profits with you.
Immediate annuity is usually purchased to provide a guaranteed income that cannot be outlived. This is the only product that will guarantee you will never outlive your income. This product is able to provide an income stream for retirement, stability in the event of long-term illness or possible nursing home stay, and much more.
Annuities have several guaranteed lifetime income options
- Life annuity - provides guaranteed income for life, stops at death.
- Installment refund - Income for life with the total payments received never to be less than the funds paid to purchase this option. If you die before all these funds are paid out, your beneficiary will receive payments until the full amount is paid out.
- Cash refund - much the same as number two, except the beneficiary would receive any balance of funds in a lump sum, not payments.
- Life annuity period certain - guaranteed income for your life time, plus if death occurs before the end of a certain period (5 to 50 yrs) the payments would transfer to the beneficiary for the remainder of the period that was selected.
- Joint and survivor - provides a guaranteed income for your lifetime plus the lifetime of your survivor if you should die.
- Joint and contingent survivor - provides guaranteed life income to you, if you die first, the joint annuitant would receive 50% of the payment you received. If the joint annuitant dies first you would continue to receive 100% of the payments for your lifetime.
The Senior Perspective
The number one problem seniors face today is outliving their money for retirement. This problem has become more evident as longer life spans, lower interest rates, along with the mind altering fact that many of our seniors have lost substantial amounts of money in the stock market the past few years.
This situation will call for some very firm planning with the remainder of savings available. Many seniors with proper planning could still provide guaranteed life incomes with levels that would meet a decent standard of living level. This is something that should be addressed as soon as possible. It's one of those things that won't just go away, plus the present financial environment doesn't provide the time it would take to recoup.