Fixed annuities can be a valuable tool for retirement planning when used wisely, but that doesn’t mean they are easy to understand. Here are five things you should know about them to avoid making a mistake.<\/p>\n\n\n\n
You can’t just quit. <\/strong> A fixed annuity offers a guaranteed income stream, but in exchange, there may be a so-called “surrender period.” This is the time you must wait before withdrawing a specified percentage of your money.<\/p>\n\n\n\n Be cautious about bonuses. <\/strong> There’s no such thing as a free lunch. If the insurance company selling an annuity is offering a bonus, it may come with a cost. For example, a higher interest rate in the first year may come with a lower interest rate in subsequent years.<\/p>\n\n\n\n Understand rates. <\/strong> Interest rates, cap rates, and withdrawal rates are easy to mix up. The interest rate is the percentage you will earn on your initial investment: with a fixed annuity, the rate is set regardless of what the market does. The cap rate is the highest amount of interest you can make in any given year. Lastly, the withdrawal rate is how much money you can withdraw from your annuity: for example, if you invest $100,000 and are permitted to withdraw 6% annually, you can take out $6,000 per year for the rest of your life.<\/p>\n\n\n\n Know how to move your money. <\/strong> At some point, you may want to move your money from one annuity to another. If you do so, be sure the money goes directly from one insurance company to another.<\/p>\n\n\n\n Find a trustworthy advisor. <\/strong> Annuities can be complicated, but there are experts (like us) who know the ins and outs. Be sure you consult with us when purchasing one.<\/p>\n\n\n\n We can help you ensure that you are using annuities correctly. Please call or email us for more information about your options.<\/p>\n","protected":false},"featured_media":0,"template":"","meta":{"_acf_changed":false,"_links_to":"","_links_to_target":""},"article_category":[38],"class_list":["post-23789","articles","type-articles","status-publish","hentry","article_category-annuities"],"acf":[],"_links":{"self":[{"href":"https:\/\/getreadynewsletters.com\/members\/wp-json\/wp\/v2\/articles\/23789","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/getreadynewsletters.com\/members\/wp-json\/wp\/v2\/articles"}],"about":[{"href":"https:\/\/getreadynewsletters.com\/members\/wp-json\/wp\/v2\/types\/articles"}],"wp:attachment":[{"href":"https:\/\/getreadynewsletters.com\/members\/wp-json\/wp\/v2\/media?parent=23789"}],"wp:term":[{"taxonomy":"article_category","embeddable":true,"href":"https:\/\/getreadynewsletters.com\/members\/wp-json\/wp\/v2\/article_category?post=23789"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}