The major benefits of annuities lie in their stability, regardless of market volatility, with an added bonus of being tax-deferred. People typically buy annuities to help manage their income in retirement. Annuities provide three things:

• Periodic payments for a specific amount of time. This may be for the rest of your life, or the life of your spouse or another person.
• Death benefits. If you die before you start receiving payments, the person you name as your beneficiary receives a specific payment.
• Tax-deferred growth. You pay no taxes on the income and investment gains from your annuity until you withdraw the money.

• Fixed/Traditional Annuities are for individuals who desire a guarantee of their principal, and a fixed interest on their investment. Fixed annuities offer very little risk, and are not subject to the fluctuations of the market. Annuities can also offer interest rates that are preferable than those offered by a savings account or other relatively conservative type financial products.

• Multi-Year Guarantee Annuities (MYGAs) are a type of Fixed Annuity that pay a specific percentage yield for a contracted period of time, and individuals are able to defer the taxes on the interest until the investment is withdrawn. MYGAs also tend to have a little more liquidity, and many allow up to an annual 10% penalty-free withdrawal.

• Fixed-Indexed Annuities offer individuals little more reward on their money by being linked to market indexes such as the S&P or NASDAQ, without risking their principal. Retirees can receive interest based on the market’s growth while also receiving a guarantee on their original principal.
• Single Premium Immediate Annuities (SPIAs) are products that accept a lump-sum contribution, and then distribute a steady stream of income. SPIAs allow the client to specify the time period over which the annuity pays out, and the benefit is locked in at a guaranteed stream of income that cannot be outlived.

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