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May 12, 2015 • 3 minutes
Though annuities can be a valuable part of your overall retirement portfolio, not all annuities are the same. Some annuities have oppressive terms which may not offer you the best opportunity to reach your retirement income goals. Other types of annuities are more flexible, offering account holders the ability to customize their experience.
Annuities are a confusing product, for basic information you might want to visit: “What is an annuity?”
However, below we outline some annuity products that offer a degree of flexibility to help you better meet your personal retirement goals:
The Equity Index Annuity is a combination of a fixed and variable annuity that tries to give the account holder the best of both worlds. This annuity product offers the low-risk of a guaranteed return that you get with a fixed annuity, while also providing the same type of opportunity for higher gains that is offered by a variable annuity. This means that you are able to benefit when stock prices rise, but also protect yourself in a downturn because you earn a guaranteed minimum even with dips in the market.
This annuity product can be good for those who want flexibility in terms of gains, but still want to avoid risk.
The Flexible Premium Deferred Annuity (FPDA) is an annuity with flexible terms that allows account holders to customize this product to best meet their individual needs. Depending on the terms of the contract, premium payments can be monthly, annually, or as a one-time lump sum. Similarly, the distribution payments after maturity can be distributed monthly, quarterly, twice a year, or annually.
Some contracts for these annuity products will even give you a bonus for any additional ongoing payments that you make into the annuity. This can be a great option for those who are seeking an annuity product that can be tailored to their unique needs and preferences.
The Fixed Income Annuity, or FIA, is the more flexible of the two types of commercially available deferred fixed-income annuities. With this annuity product, you have flexibility in the income start date, as long as it is on or after the earliest start date defined by the contract. In contrast to a deferred-income annuity (DIA), fixed income annuities offer an investment value in addition to the deferred income. FIAs also have a death benefit that is equal to the contract’s accumulation value.
There are so many different types of annuities and so many different options that can be applied to an annuity.
Ultimately, the best lifetime annuity for you will depend on your unique situation. Before you invest, take time to review the charges, fees, and conditions of each annuity product. You can do this yourself with an annuity broker though you may also want to consult with a financial advisor.
After getting all of the information that you need to make an informed decision, choose the annuity product that best fits into your individual retirement plan and offers you the flexibility that you need.
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