Everything you need to know about variable annuities.
Links in this video:
SEC’s “Variable Annuities; What You Should Know” –
Retirement Planning Insights –
Taxes in Retirement –
#VariableAnnuity #Annuity #Annuities
DISCLAIMER: This video is only helpful hints and education. It is not specific tax, legal or investment advice. Before considering acting on anything you see in this video, first consult with your tax, legal or investment advisor. While the information expressed in this video is believed to be accurate, neither Andy Panko, CFP®, RICP®, EA nor Tenon Financial LLC make any guarantees to its accuracy….(read more)
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What is a Variable Annuity?
As individuals plan for their retirement, they often consider investment options that can provide a steady stream of income during their post-work years. One such option is a variable annuity. But what exactly is a variable annuity and how does it work?
A variable annuity can be best described as a contract between an individual and an insurance company. It is a long-term investment vehicle that is designed to provide a regular income stream in retirement. Unlike a fixed annuity, a variable annuity allows the investor to choose how their money is invested, typically involving a selection of mutual funds or other investment options offered by the insurance company.
The key feature of a variable annuity is its potential for growth. The performance of the underlying investment options dictates the value of the annuity over time. This means that the return on investment can vary, hence the name “variable” annuity. The value of the annuity can fluctuate based on market conditions and the performance of the chosen investments, which can result in both gains and losses.
One of the advantages of a variable annuity is its tax-deferred status. This means that any earnings generated within the annuity are not subject to income tax until they are withdrawn. However, it is important to note that withdrawals made before age 59½ may be subject to a 10% penalty.
Variable annuities also offer a range of optional benefits, known as riders, which can be added for an additional cost. Some common riders include death benefit protection, which ensures that a certain amount is paid out to beneficiaries upon the annuitant’s death, and guaranteed lifetime income, which guarantees a minimum amount of income per year for the rest of the annuitant’s life.
While variable annuities provide the potential for growth and a reliable income stream in retirement, they also come with certain risks. The performance of the underlying investments can be volatile, which means that the value of the annuity could decrease significantly during periods of market downturn. Additionally, variable annuities tend to have higher fees and expenses compared to other investment options.
Before deciding to invest in a variable annuity, it is essential to carefully consider one’s financial goals, risk tolerance, and investment time horizon. Consulting with a financial advisor can help individuals understand whether a variable annuity is a suitable option for their personal circumstances.
In conclusion, a variable annuity is a long-term investment vehicle offered by insurance companies that provides individuals with the opportunity for growth and a consistent income stream during retirement. However, it is essential to thoroughly understand the risks and costs associated with these annuities before making an investment decision.
This guy IS GREAT!!!! I love this- You have the millennials contribution to the retirement financial world via this Steve Guttenberg clone. These videos are VERY informative and make a very confusing subject easy to wrap your brain around. I am licensed life insurance producer and I watch these videos as a form of continuing education, so KUDOS to Andy Panko!
Fantastic! Great examples, guess I am lucky my prospectus is only 44 pages. My gut instinct told me I should keep my money in a IRA, but I was strong armed by my advisor (fudicary?). Bottom line going to wait for surrender charges are zero and take my hit with poor yields and cash out.
Excellent video! Thank you
Does the death benefit last throughout the accumulation phase only? Is the death benefit gone once I begin to annuitize?
Once a person decides what type of annuity is for them ie: an income or variable, how do they decide on specific product with any of the companies that offer annuities? There are so many out there.
Hello like your blogs, very informative. Here's a kind long question. 1. Want to see what u think? . Annuity question. Have $300K, want a fixed immediate @5% annually. for 10,15 or 20 years Is that doable ? 5% of $300K is $15,000. If so, how does that work? If no, why not? 2. What are the fees or service charges for this kind of annuity? Are fee/service charge monthly/annually? Will fees increase over time and by what percentage? Looking for feeedback from all sources. Thanks in advance.
Thank you! It was really helpful. I have a question that I can't find the answer. Is taxable income from a variable annuity considered as an investment income? If it is then we will be able to use the income to offset the investment interest expenses under 1040 Sch A. Thank you so much!
Thank You , Thank You & Thank You ! very beneficial information .
Very well presented and objective information on an often difficult to understand subject. Your videos are great keep them coming!
This was very helpful in understanding what I already purchased with the riders in place. Thank you!