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Variable Annuities: An Attractive OptionIndividuals who want to supplement their retirement savings continue to view variable annuities as an attractive option. During the first six months of 2003, more than $62 billion was channeled into variable annuity contracts — up from $55 billion during the same period a year earlier.¹
When you purchase a variable annuity, you direct your premiums into your choice of investment subaccounts. The return on your assets reflects the performance of these subaccounts.3 Variable annuities offer several attractive features. Flexibility. Most people can find a variety of investment subaccounts that are closely in line with their objectives, risk tolerance, and the number of years they have until retirement. Manage investment risk. Many variable annuities offer a guaranteed interest-rate investment option, automatic portfolio rebalancing, and other features that can help manage investment risk. No limits. There are no federally imposed limits on the amount of after-tax dollars that can be put into a variable annuity (however, there may be insurance company limits). There is less paperwork to suffer through at tax time and fewer rules to remember when the account begins distributing income during retirement. Guaranteed income. If you choose a fixed-income payout option, an annuity can provide income that could potentially last for your lifetime. A portion of each of these payments is tax-free because it is considered a return of the original investment. The remainder is taxed at ordinary income tax rates — enabling the taxes to be spread out over a period of years. Featuring a combination of flexibility and simplicity, variable annuities can be a valuable addition to your retirement plans. 1)
National Association for Variable Annuities, 2003 © 2004 Emerald Publication |
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Annuity Guide
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Research Annuities
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Annuity Concepts
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An annuity is basically a contract with an insurance company. In exchange for your
payments, the insurance company agrees to pay you regular income for a set
number of years in retirement. Most annuity contracts offer flexible payout
options — including a lifetime benefit period that pays a fixed amount each
month for the rest of your life.2