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) contributions.
• Fixed rate of return, so you know up front how much your investment will earn, and you avoid market fluctuations.

Fees

• Typically no fees — all of your money is invested.
• Contingent deferred sales charge (CDSC) that declines to zero over a set period of time.

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.