At ABB Wealth Strategies, we do much more than just match our clients with their ideal annuity. We also help those with existing annuities identify the inefficiencies in their current policy and find the alternative that best fits their financial goals. Here are some things you should know about your current annuities.
Many people choose an annuity option without fully understanding all its benefits. Not all annuities are built the same, and they all have their unique benefits. There are three main kinds of annuities:
Fixed annuities are seen as the lower-risk option and the simplest type of annuity. An insurance company guarantees a fixed interest rate for an agreed length of time in exchange for your investment.
At the end of your contract, you have the option to annuitize your contract, renew, or transfer your capital into another annuity contract. Because the interest rate is fixed, you’ll know the exact amount of your monthly payments. Although this option is excellent for growing income during the accumulation phase, the income ceiling is not as high as other options during the distribution phase.
Fixed index annuities are a variation of fixed annuities which allow you to increase your gains during rises in the market while protecting your investments from downturns. Instead of investing your assets directly into stocks, your insurance company tracks the market performance of key indexes and passes earnings to you when there is a rise in market value.
The biggest benefit of this type of annuity is that your money is not exposed to the whims of the market. If the tracked index increases in value, you earn a percentage commensurate with the rise, but if the index decreases in value, your annuity stays at the same level.
This is the annuity option with the most significant upside because it gives you the opportunity to invest your money through direct market options similar to mutual funds. Although these annuities have the biggest earning potential, they also expose you to the risks and volatility of the market. Unlike fixed annuities, you can lose money after a bad market performance.
At ABB Wealth Strategies we also specialize in next generation annuities which can pay the highest possible lifetime income with for the lowest possible premium. These annuities are designed to offer the most potential growth on your principal by providing 100% participation in an index without exposure to the potential downturns of the market.
For example, if you invested $100,000 in a Next Generation Growth Annuity and the stock market went up 10% that year, you would be credited $10,000 in interest and your account would go up to $110,000. If the next year the market went down 15%, your account balance would stay at $110,000. You don’t lose anything; you simply get credited 0% interest. However, when the market begins to rise again, your annuity will start rising from your high-water mark level of $110,000.
ABB Wealth Strategies is equipped with a proprietary system for maximizing the value of your annuities, and our team has decades of experience in the industry. We can guide you through the process and give you the tools you need to ensure a financially comfortable retirement. Our team will assess the state of your current annuity, identify inefficiencies, and find a way to maximize your returns.
Our goal is your financial success. The ABB Wealth Strategies team goes above and beyond for our clients, taking an individualized approach for your finances and answering every question you might have about annuities. Get in touch with our office today and learn how we can help!