FAQ
Retirement Planning FAQ
Common questions about annuities, safe money strategies, and retirement income.
What is a fixed indexed annuity?
A fixed indexed annuity is an insurance contract that may credit interest using a formula tied in part to an external index. Your premium is not directly invested in that index, but fees, withdrawals, rider costs, and surrender terms can still reduce contract value.
How is a fixed indexed annuity different from a variable annuity?
A variable annuity generally invests in market-based subaccounts, so value can fluctuate with those investments. A fixed indexed annuity uses a contract formula to calculate interest credits; an index decline may mean no index-linked credit for a period, but charges, withdrawals, rider costs, and surrender terms may affect contract value.
Is my money safe with a fixed indexed annuity?
A fixed indexed annuity is an insurance contract, not a bank deposit. Contract features may limit index-linked interest losses, but fees, withdrawals, rider costs, and surrender terms can reduce value. Any guarantees depend on the policy and the issuing insurer's claims-paying ability.
What is a surrender period?
A surrender period is a set number of years during which withdrawing more than a certain amount from your annuity may trigger a surrender charge. Most contracts allow penalty-free withdrawals up to a set percentage each year even during this period.
Can I lose money in a fixed indexed annuity?
An index decline may mean no index-linked interest credit for that period, depending on the contract. This does not prevent fees, withdrawals, rider costs, or surrender terms from reducing contract value. Review the specific policy.
What does "safe money planning" mean?
Safe money planning is an informal phrase for allocating part of a financial plan to options with different risk, access, and return characteristics. No strategy is risk-free; contract protections and guarantees depend on the policy and insurer.
How does retirement income planning work?
Retirement income planning compares potential income sources such as Social Security, pensions, savings, and annuity payments with expected expenses. It can help evaluate tradeoffs, but does not guarantee income will cover every expense or last throughout retirement.
When should I start planning for retirement income?
Most people benefit from starting retirement income planning 5 to 10 years before their target retirement date, giving enough time to structure guaranteed income sources and adjust strategy as retirement approaches.
What is the difference between a pension and an annuity?
A pension is an employer-funded retirement benefit, typically based on years of service and salary. An annuity is a contract purchased from an insurance company that may provide payments under selected contract terms; payment options, guarantees, and costs vary.
Can I use an annuity alongside Social Security?
An annuity may complement Social Security. Payment options, amounts, timing, fees, and guarantees depend on the selected contract and insurer.
How do I know if an annuity is right for me?
It depends on your full financial picture — your other assets, income needs, risk tolerance, and time horizon. A licensed agent can review your situation and help you decide whether an annuity fits alongside your other retirement savings.
What happens to my annuity when I pass away?
Beneficiary and death-benefit provisions vary by contract and payout option. Review the policy to understand what, if anything, may be payable after the owner's death.