For most people planning for retirement, the ideal scenario is to secure a guaranteed income stream that they won’t outlive. This income should grow and keep up with inflation throughout retirement. It should be simple, secure, and worry-free. They should receive interest credited to their account that is competitive with the markets, yet their account should be completely protected from downside market risk. Furthermore, their account value, as well as the interest earned in prior years, should never decrease or be taken away due to market downturns.

If the scenario described above resonates with you, you should consider annuities as part of your retirement planning strategy. Continue reading below, or Contact Our Annuity Experts, to find out which type of annuity—fixed, index, or hybrid—is most suitable for you.  We work with dozens of top-rated annuity providers, and can help match you with the right annuity that best aligns with your retirement savings and income goals.

Key Features of Fixed, Index, and Hybrid Annuities

Lifetime Guaranteed Income: Annuities provide the unique benefit of income you cannot outlive, securing your financial future. No other retirement plan can do that.

Flexible Retirement Income Options: You can opt for regular, guaranteed payments or choose a more flexible withdrawal schedule.

Tax-Deferred Growth: Annuities grow tax-deferred, which means you don’t pay taxes on the interest or investment gains until you withdraw the money. This allows your investment to compound more quickly than it would in a taxable account, leading to higher income during retirement.

Unlimited Contributions: Annuities aren’t bound by the same IRS contribution limits as 401(k)s and IRAs, offering you greater financial flexibility. This means that CDs, mutual funds and other retirement savings can be rolled over into an annuity to get tax-deferral.

Market Risk Protection: For both fixed and index annuities, your account value, consisting of your initial investment and all interest earned, is fully protected from market losses. This can be especially important during retirement when you may not have the time to recoup losses from major market downturns.

Inflation Protection: Some annuities offer the option to increase payouts over time to keep pace with inflation, which can protect your purchasing power in retirement.

Death Benefit: Many annuities come with a death benefit, which ensures that if the annuitant dies before receiving all of their payments, the remaining amount goes to their designated beneficiaries.

Liquidity Options: Some annuities allow for withdrawals up to a certain percentage without surrender charges, which could offer more flexibility compared to other investment types.

Annuity Riders: Annuity riders are optional features or additions you can add to an annuity contract. They’re designed to provide additional benefits such as enhanced income streams, cost-of-living adjustment riders that increase your income to keep up with inflation, long-term care riders, and others.

Differences Between Fixed, Index and Hybrid Annuities

Fixed Annuities

Fixed annuities have all the benefits mentioned above for annuities. Below is a list of some additional characteristics specific to fixed annuities:

• The Most Conservative Choice: Fixed annuities are the simplest and most conservative of all annuities.
• Guaranteed Interest: Fixed annuities receive a guaranteed declared interest every year.
• Immediate Fixed Annuity: You make a lump-sum payment to an insurance company, and in return, they start paying you an income stream for a specific period of time (e.g., 5, 10, or 20 years), or a guaranteed lifetime income stream that you, and your spouse if you wish, cannot outlive.
• Deferred Fixed Annuities: These serve as a tax-deferred savings vehicle, allowing you to trigger an annuity income stream at a future point. They also have the flexibility to take out money (with some restrictions) when you choose.

To delve deeper into fixed annuities, reach out to our Expert Annuity Specialists or explore our comprehensive Fixed Annuities guide.

Index Annuities

Index annuities include all the benefits mentioned above for annuities and are considered a more moderate-risk retirement savings and income plan. The interest you earn is based on the indices, such as the S&P 500, you choose to allocate your money into; however, your account value is always fully protected from market losses. This type of annuity is considered moderate risk primarily because the interest can be as low as zero some years. The interest, however, will never be negative.

• Market Based Returns: As the name implies, index annuities pay interest based on the performance of indices such as the S&P 500, Nasdaq 100, and many other options.
• Protection from Market Loss: The primary difference between index annuities and 401(k) or IRA stock mutual funds is that they have the guarantee of principal protection. Your investment and all interests earned in prior periods are fully protected from market losses. This gives you the peace of mind of knowing your retirement savings are safe from market volatility, and knowing they will be there when you need the funds.
• Higher Interest than Fixed Annuities: Index annuities are generally expected to receive higher interest than fixed annuities. The highly rated index annuities with which we work have historically averaged long-term interest rates in the same range as what you would expect from stock mutual funds, without the worry of market loss.

For more information on index annuities, Contact Us to speak with an annuity specialist, or visit our Index Annuities page.

Hybrid Annuities

Hybrid Annuities, as the name suggests, are a blend of fixed and index annuities. They provide a secured income stream for a set time span, such as 5, 10 or 20 years. They can also be set up to guarantee lifetime income you cannot outlive for yourself and your spouse. However, this income stream has the potential to increase, but it will never shrink during your retirement years, depending on how the indices perform. Any increase in the income level establishes a new baseline income that’s guaranteed never to decrease, but which has the potential to rise further when the indices you are allocated into go up.

We can send you free custom-made illustrations showing how fixed, index or hybrid annuities would have performed historically based on your age, individual or joint account, investment amount, and retirement age. This way you can make a more informed decision about which type of annuity is best for you.

Optimize Your Retirement by Rolling Over Your 401(k), IRA, or Existing Pension Plan into an Annuity

There are many benefits to rolling over your current retirement investments and savings over to an annuity:

• IRA or 401(k) Rollover to an annuity allows you to have interest credited based on the performance of indices such as the S&P 500, Nasdaq 100, and others. The main difference, however, is that in an annuity you will have the peace of mind of knowing that your original investment and all interests earned are fully protected from market losses. To learn more about the benefits of rolling over your 401(k) or IRA click on the link or Contact Our Annuity Experts.
• Pension Plan Rollover to a fixed, index, or hybrid annuity can be done at any point up to starting your pension income stream. Some of the benefits of rolling over your pension include receiving a higher interest and income, gaining flexibility in accessing your funds, having a death benefit you can leave your loved ones, among many others. To learn more about the benefits of rolling over your pension plan to an annuity click on the link or Contact Us.
• Rolling over a CD or Mutual Fund to an annuity offers many benefits. The IRS does not have contribution maximums to an annuity. This means all your retirement savings can benefit from tax deferral. Annuities, including fixed annuities, typically pay higher interest than CDs, along with faster growth due to tax deferral. In the case of mutual funds, you can get the benefit of tax deferral and receiving interest based on indices, but with full account protection from market losses. To learn more about the benefits of rolling over your CDs, retirement savings, and mutual funds intended for retirement to an annuity please click on the link or Contact Our Annuity Experts.

Start Your Journey to a Secure Retirement with Trusted Solutions from Annuity Emporium

Why settle for just one or two options when you can choose from dozens of the best? At Annuity Emporium, we aren’t restricted to a single insurance company. We offer you a carefully-chosen range of highly-rated fixed, index, and hybrid annuities from industry-leading providers—each tailored to meet your unique retirement goals.

Get Your FREE Customized Annuity Illustration Today!

Curious about which type of annuity—fixed, index, or hybrid—is ideal for you? Take the guesswork out of retirement planning with our complimentary, personalized annuity illustrations. Learn how you can secure a lifetime retirement income that is both guaranteed and has the potential to grow, but will never decrease.

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