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Fixed Annuities explained

This Fixed Annuities explained article provides more information to help you meet your Life Insurance & Retirement needs.

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As covered on the main Life Insurance Basics page, the main goal is to guarantee financial security for loved ones after someone passes away.

Fixed Annuities are insurance contracts that either provide tax-deferred growth or a guaranteed stream of income in retirement. Their primary purpose is to secure your retirement nest egg and provide financial security throughout.

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The Highest Annuity Rates in Mesa, AZ & Toledo, OH - More Retirement Income

Fixed Annuities operate much like a banking product you may already be familiar with: the CD (certificate of deposit). As a contract purchased from a life insurance company, a fixed annuity provides a guaranteed, fixed rate of return for a specific period of time (typically 3-10 years). Both the principal investment and the interest rate are guaranteed and are unaffected by fluctuations in the market. In simple terms, a fixed annuity is a low risk way to earn money in a certain amount of time.

Ideally, a fixed annuity is a long-term retirement investment tool. For the purposes of portfolio diversification, a fixed annuity can be a terrific value. It’s possible to stagger the renewal dates of multiple fixed annuities (similar to the way many use CDs) and have money become liquid (that means no surrender charges or penalties for withdrawals) on a regular basis. It’s important to note that, as with many investments, early withdrawals before age 59 ½ may be subject to federal tax penalty, and all withdrawals are subject to income tax. There are also surrender charges to consider for withdrawing more than the allowed percentage each year.

A fixed annuity is an asset with death benefit options – it bypasses probate and passes directly to your designated beneficiaries as outlined in your contract. Optional riders can be added, at an additional cost, to increase the payout amount to your beneficiaries. Whether you have minor children who aren’t ready to handle money, adult children who are a little too carefree to trust with a sum of money, or extended family, friends, or organizations you want to favor, you know your situation best. It’s comforting to have the ability to direct how and when your annuity will support the people you care about most.

Potential Benefits Of Fixed Annuities

• Protection from economic climate – guaranteed interest rate, regardless of market performance

• Tax-deferred growth – compounded earnings aren’t taxed until withdrawn or taken as income

• Growth with minimal investment-risk exposure – a dependable interest rate grows your money better than traditional savings products

• Flexible payout options – contract can be annuitized, payments can be made for a specified period of time, or an income stream can be created to last a lifetime

• Minimal investment requirements – many require an initial investment of only $1,000-$10,000

• Beneficiary protection – bypasses lengthy probate issues, and payout can be structured according to your wishes

Potential Drawbacks Of Fixed Annuities

• Limited growth potential & higher inflation risk – the tradeoff for less risk is less opportunity for growth, and the rising prices of goods and commodities over time may outpace your earnings without careful planning

• Early withdrawal penalties & surrender fees – know the rules to avoid costly mistakes

• Intended for long-term goals – fixed annuities are not designed to meet short-term goals

How are Annuity Rates looking for 2023?

Starting the year (as of 01/08/2023) these are some of the highest averages seen in awhile. Keep in mind, they do flucuate, but now may be a great time to lock in at a great rate.

• 2-Year: 4.30%

• 3-Year: 5.50%

• 4-Year: 5.15%

• 5-Year: 5.60%

• 6-Year: 5.45%

• 7-Year: 5.70%

• 8-Year: 5.00%

• 9-Year: 5.00%

Let's look at the latest update (09/13/2023) this time I included the 10-year rate because it's coming in at 6%. In January 2023 it was just a little over 5%.

• 2-Year: 5.15%

• 3-Year: 5.40%

• 4-Year: 5.35%

• 5-Year: 5.55%

• 6-Year: 5.65%

• 7-Year: 5.55%

• 8-Year: 5.70%

• 9-Year: 5.35%

• 10-Year: 6.00%

*Rates from Google Search displayed from the Annuity Expert - https://www.annuityexpertadvice.com/annuity-rates/

Have Questions? We’re Here To Help!

Annuities and life insurance can play an essential role in your retirement portfolio by helping to protect what you’ve earned and ensure it lasts.

Serving Mesa, Gilbert, Queen Creek and the state of Arizona. PJS Insurance Services should be your first and last stop when looking for life insurance & AZ Fixed Annuities.

There is a difference. To find out how our Independent insurance agency can help you find the right Arizona Annuity and insurance coverage, please contact PJS Insurance Services. Give us a call today at (602) 750-0616.

Now serving Toledo, Sylvania, Ottawa Hills and the state of Ohio. PJS Insurance Services offers you more choices and customized coverages at the lowest price.

Experience the difference. To find out how our Independent insurance agency can help you find the right life insurance and OH fixed annuity coverage, please contact PJS Insurance Services. Give us a call today at (419) 318-9130.

Life Insurance in Arizona or Ohio-have more questions?

Call PJS Insurance Services at (602) 750-0616 in Mesa, AZ or (419) 318-9130 in Toledo, OH.

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