When asked in a recent study if the nation faces a retirement crisis, 79% of Americans agree there indeed is a retirement crisis. More than half of Americans (55%) are concerned that they cannot achieve financial security in retirement.¹

With pension offerings on the decline, you may want to consider a fixed income component to your financial strategy. In short, adding an annuity may be an opportunity to help ensure a portion of your retirement income will be guaranteed.

What is an annuity?

An annuity is a contract you purchase from an insurance company. For the premium you pay, you receive certain fixed and/or variable interest crediting options able to compound tax deferred until withdrawn. When you are ready to receive income distributions, this vehicle offers a variety of guaranteed payout options — some even for life.

Most annuities have provisions that allow you to withdraw a percentage of the value of the contract each year up to a certain limit. However, withdrawals will reduce the contract value and the value of any protected benefits. Excess withdrawals above the restricted limit typically incur “surrender charges” within the first five to 15 years of the contract. Because annuities are designed as long-term retirement income vehicles, withdrawals made before age 59 ½ are subject to a 10% penalty fee, and all withdrawals may be subject to income taxes.

¹ Dan Doonan, Kelly Kenneally. The National Institute on Retirement Security. February 2024. "Retirement Insecurity 2024: American's Views of Retirement." https://www.nirsonline.org/reports/retirementinsecurity2024/. Accessed Oct. 7, 2024.