Annuities 101, part 2: what is a fixed annuity?

april 14, 2023


What is an annuity? Part two of Jackson’s three part series explains what a fixed annuity is and how it can help you on your retirement journey.

Let's talk about Fixed Annuities

When it comes to investing for retirement, are you interested in protecting your principal, guaranteeing your growth, and leaving a legacy? If so, you should ask your financial professional how a fixed annuity may help you achieve these objectives. 

 

Ask your financial professional about protecting your principal.

Running out of money is consistently cited as one of retirees’ greatest concerns and unpredictable stock market volatility may only exacerbate this worry. After all, the value of a retirement nest egg can fluctuate significantly depending on how much is allocated to stocks. 

A fixed annuity, however, can help alleviate the fear of losing money because it does not involve an investment in the stock market. Instead, the principal is protected with a guaranteed interest rate backed by an insurer like Jackson. 

 

Ask your financial professional about guaranteeing your growth.

Low-interest rate environments can be a real challenge for retirees with fixed incomes. When yields on traditional fixed-income investments are lower than expected, retirees' spending power declines, and anxiety rises.

A fixed annuity can help eliminate concerns about a reduction in income because it guarantees your principal’s growth. It does this through a fixed rate that adds interest to your account through the life of the annuity's contract.

 

Ask your financial professional about tax-deferred growth*.

The taxes you might pay on traditional investment earnings like interest, capital gains, and dividends can erode the value of your retirement savings. Fixed annuities leverage the power of tax deferral to let more of your earnings grow.

With a fixed annuity, interest earned is not subject to taxation until you take a withdrawal. This allows your principal to grow tax-deferred and puts more of your money to work, which can help you accumulate a larger retirement nest egg.

 

Ask your financial professional about leaving a legacy.

A fixed annuity also can help you address your desire to leave something of value to your heirs after your death. With a standard death benefit, your beneficiaries will receive a payout equal to the annuity's accumulated value if you die before distributions begin.

Payments are made directly to your beneficiaries, avoiding the costs and delays of probate. And there are no withdrawal charges on death benefit payments.

To learn more about fixed annuities, simply schedule a call or meeting with your financial professional and discuss if this investment vehicle is right for your retirement plan.

 

 

Annuities are long-term, tax-deferred vehicles designed for retirement. Earnings are taxable as ordinary income when distributed. Individuals may be subject to a 10% additional tax for withdrawals before age 59½ unless an exception to the tax is met.

*Tax deferral offers no additional value if an annuity is used to fund a qualified plan, such as a 401(k) or IRA, and may be found at a lower cost in other investment products. It also may not be available if the annuity is owned by a legal entity such as a corporation or certain types of trusts.

Jackson, its distributors, and their respective representatives do not provide tax, accounting, or legal advice. Any tax statements contained herein were not intended or written to be used and cannot be used for the purpose of avoiding U.S. federal, state, or local tax penalties. Tax laws are complicated and subject to change. Tax results may depend on each taxpayer’s individual set of facts and circumstances. You should rely on your own independent advisors as to any tax, accounting, or legal statements made herein.

Guarantees are backed by the claims-paying ability of Jackson National Life Insurance Company or Jackson National Life Insurance Company of New York and do not apply to the principal amount or investment performance of a variable annuity’s separate account or its underlying investments. They are not backed by the broker/dealer from which this annuity contract is purchased, by the insurance agency from which this annuity contract is purchased, or any affiliates of those entities, and none makes any representations or guarantees regarding the claims-paying ability of Jackson National Life Insurance Company or Jackson National Life Insurance Company of New York.

The latest maturity date or income date allowed under an annuity contract is age 95, which is the required age to annuitize or take a lump sum. Please see the prospectus for important information regarding the annuitization of a variable annuity contract.

Annuities are issued by Jackson National Life Insurance Company (Home Office: Lansing, Michigan) and in New York, by Jackson National Life Insurance Company of New York (Home Office: Purchase, New York).  Annuities are distributed by Jackson National Life Distributors LLC, member FINRA. These contracts have limitations and restrictions. Jackson issues other annuities with similar features, benefits, limitations, and charges. Contact Jackson for more information.

Jackson® is the marketing name for Jackson Financial Inc., Jackson National Life Insurance Company® (Home Office: Lansing, Michigan),  and Jackson National Life Insurance Company of New York® (Home Office: Purchase, New York).