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The type of annuity you choose — fixed, variable or indexed. Current interest rates. Whether you want payments just for yourself or to continue to a spouse. Extra features you add to the annuity ...
An indexed annuity (the word equity previously tied to indexed annuities has been removed to help prevent the assumption of stock market investing being present in these products) in the United States is a type of tax-deferred annuity whose credited interest is linked to an equity index—typically the S&P 500 or international index.
Beyond choosing what kind of annuity to purchase – immediate vs. deferred and fixed, indexed or variable, you'll also need to consider how to receive your annuity payments.
A deferred annuity that permits allocations to stock or bond funds and for which the account value is not guaranteed to stay above the initial amount invested is called a variable annuity (VA). A new category of deferred annuity, called the fixed indexed annuity (FIA) emerged in 1995 (originally called an Equity-Indexed Annuity). [5]
The same investment being tracked in the index annuity with an initial investment of $100,000, a 40% loss after one year is replaced with a 0 and the account balance is still $100,000, the subsequent 10% gain the following year is reduced to 6% due to the cap, which would be a $6,000 gain, so the $100,000 investment would be worth $106,000.
The main purpose of an annuity is to remove longevity risk for retirees, meaning you don’t have to worry about outliving your retirement savings. This is an especially important consideration ...
Money invested in an annuity grows tax-deferred, meaning you’re taxed upon withdrawal or when payments begin. Annuity contracts are highly customizable, which is part of what makes annuities so ...
When using the general term “annuity,” there are two types of annuities: ordinary and period due. Ordinary annuity: Payments are due at the end of the period. Annuity due: Payments are due at ...