Fixed Annuity

If you’re looking to increase your tax-deferred savings for retirement with lower-risk investments and are comfortable with conservative returns, consider a fixed annuity. Compare Annuities

Overview

A fixed annuity allows you to invest for retirement with a fixed rate of return, and not pay taxes until you withdraw your money. A fixed annuity might be appropriate for you if:

  • You have a lower risk tolerance or want to invest a portion of your retirement portfolio more conservatively.
  • You want a guaranteed rate of return without market risk.
  • You expect to be in a lower income tax bracket after you retire.
  • You expect to begin withdrawing these funds after age 59 1/2.
  • You are in your 60s or 70s and are preparing for or are in retirement.

How it works

You purchase an annuity with a specified rate of return and, at retirement, you have the option to convert your assets into a guaranteed stream of income.

With some fixed annuities, you have the ability to add to your investment at later dates.

Key benefits

  • Additional tax-deferred savings opportunity, even if you’ve maxed out your 401(k) plan or Individual Retirement Account (IRA).
  • Fixed rate of return, so you know up front how much your investment will earn, and you avoid market fluctuations.

Fees

Considerations

  • May include surrender penalties for early withdrawal.
  • Potential tax penalties for withdrawals before age 59 1/2.
  • Consult your tax advisor about other possible tax implications.
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Contingent deferred sales charge (CDSC)

If you withdraw money from an annuity contract or surrender the contract within a certain period of time after investing, the insurance company may assess a contingent deferred sales charge (CDSC). Usually, the CDSC is a percentage of the purchase payment withdrawn, and it declines gradually over the CDSC period.

For example, a seven year CDSC may decline over the first seven years of your contract: 7%, 6%, 5%, 4%, 3%, 2%, 1%, 0%.