Annuities & Income Planning in Scottsdale & Phoenix, AZ

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Between now and 2029, more than 10,000 baby boomers will retire each day, yet, a large portion of them consider themselves unprepared for life after work. In fact, 58% of workers aged 55 and older have less than $100,000 saved to last throughout their golden years.1 With the uncertainty of government benefits like Social Security and Medicare, as well as the increasing longevity we face, boomers and members of the generations that follow will all be focused on one common goal: establishing a significant source of income that is guaranteed for life.

Clients are often seeking guidance on an array of financial objectives, including experiencing protection against investment losses, how to guarantee sufficient income to meet rising health care costs, and ways to earn higher potential returns with guaranteed income while addressing tax and estate planning concerns. Our representatives at Trajan Wealth can help provide personalized annuity solutions to fit your needs, so contact us today!

12014 Retirement Confidence Survey. Employee Benefit Research Institute and Greenwald & Associates, www.ebri.org.

Annuity Features and Benefits

Annuities are insurance products filed with and approved by state insurance regulators. Fixed annuities have NO market risk, and owners of fixed annuities do not participate directly in any financial market. Whether interest is declared in advance or determined by the performance of a market index, that interest, along with the premium paid, is guaranteed NEVER to go down because the markets do. View the “9 Answers Every Investor Needs to Know about Annuities” now, or continue reading for a few highlights about these powerful products.

Insurance Protection: Annuities do not have FDIC protection. Insurance companies display their financial strength by obtaining a rating from objective rating firms such as Standard & Poor’s, Moody’s, A.M. Best, or Duff & Phelps. A solid financial backbone is usually accompanied with a solid rating.

Interest Rates: There are several variations of annuities. A fixed annuity provides a guaranteed minimum return by the issuing insurance company. A common guarantee on a fixed annuity may range between 2% and 6%. An indexed annuity credits interest based on the performance of a particular index such as the S&P 500.

Tax Treatment: All annuities grow tax-deferred; however, special action must be taken with qualified and non-qualified accounts. Taxes are only to be paid when money is withdrawn. The taxes that are being deferred remain in the account to earn you more money, rather than being paid to state and federal agencies every year.

Liquidity: Annuities do have provisions that allow money to be withdrawn. Generally, 10% of the account value is available for withdrawal, and many contracts allow earned interest to be withdrawn on a monthly basis. Additionally, there are contract provisions that allow access to all your funds in the event you are hospitalized, undergoing a life-threatening illness, subjected to a permanent or extended stay in a nursing home, or experiencing another major calamity that affect you economically. Annuities can also be structured to pay-out for the life of the owner for a fixed term such as five or ten years; this spreads out your tax burden as well as provides enhanced income security. Annuities are long-term savings vehicles and may require a 10% federal tax penalty for withdrawal of funds that exceeds those discussed above prior to age 59 ½.

Misconceptions about Annuities

You may have heard the saying, “It’s not your father’s annuity.” That’s because annuity products have evolved significantly throughout the past decade. This has also contributed to an environment full of mixed messages regarding the pros and cons of annuities.

For example, AARP Magazine published an article by Allan Roth titled “Don’t Buy It” earlier this year. One of the five investments and financial products Roth warns against is the equity-indexed annuity (more commonly referred to as a fixed indexed annuity).

Our friends at the National Association for Fixed Annuities (NAFA) created this response to help clear up confusion on the misstatements made throughout the article.

Have an article you’ve read with information you need help clarifying? Looking for specific information about a particular product? Not every annuity is right for every client. To find out what makes sense in your unique financial situation and more about how annuities can positively impact your retirement future, contact the Trajan Wealth team.

Trajan Wealth

Trajan Wealth helps our clients prepare for a successful future through financial options that are best for your lifestyle. Speak to our financial team today about your future goals and how we can help.

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