For retirement planning, annuities are highly popular tools. They come in all different sizes and forms, and although having more options might be advantageous, it can also be incredibly perplexing. Fixed annuities are a well-liked solution to ensure income without having to deal with a difficult and pricey product because of this. Nevertheless, purchasing an annuity is a significant choice. Before determining if this form of investment is good for you, you must weigh the advantages and disadvantages. In order to help you choose an effective retirement savings strategy, we’ll go through both the benefits and drawbacks of fixed annuities in this article. Advantages of Fixed Annuities An insurance plan with a guaranteed rate of return on your investment is a fixed annuity. A fixed annuity necessitates that you keep your money invested for a certain amount of time, often two to ten years, as opposed to a conventional savings account, which allows you to retrieve your money whenever you like. This advantage is that your investment will maintain its worth even if the market declines since it offers primary protection. Furthermore, fixed annuities frequently provide a higher rate of return than other safe investments like certificates of deposit or government bonds. The insurance firm would only be unable to pay this money if it went out of business. Additionally, insurance firms are quite unlikely to go bankrupt, despite the fact that many of us have reservations about large financial institutions. They are subject to state regulation, and each of those jurisdictions mandates that they maintain a sizable cash reserve to cover their liabilities (far more than bank reserve requirements). Although fixed annuities are not covered by the FDIC’s insurance program, there is very little chance that you won’t get the retirement income you’ve been guaranteed. In contrast to riskier assets like equities or mutual funds, they also offer a smaller potential for growth. If this worries you, think about a fixed indexed annuity, as they provide greater return potential while still safeguarding your capital. Considering this, fixed annuities may be a wise choice for investors seeking security and a guaranteed income in retirement. Disadvantages of Fixed Annuities The possibility that fixed annuities won’t keep up with inflation is one of its drawbacks. As a result, your annuity payments may lose some of their purchasing power over time. Furthermore, fixed annuities sometimes come with low interest rates, which might significantly lessen the buying power of your payments. In the end, fixed annuities may offer a consistent income stream, but it’s crucial to take into account how inflation and low interest rates may impact your ability to maintain a certain standard of living. Financial flexibility is an essential component of any fixed annuity pros and drawbacks list. There is an accumulating period and a withdrawal phase in every annuity. The policy’s accumulation term starts when you buy it. When you choose to withdraw money from the policy, the accumulation period will come to an end, and the withdrawal period will start. Your account balance will increase at the specified rate of interest. You have some freedom with the policy during the accumulating phase. In an emergency, you can specifically cancel the coverage and get your money back. There might be consequences for early withdrawal and surrender. However, if you absolutely need to, you may cancel the agreement and get the majority of your money back.
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Bio:
After entering the financial services industry in 1994, it was a desire to guide people towards their financial independence that drove Aaron to start Steele Capital Management in 2013. Armed with an extensive background in financial planning and commercial banking coupled with a sincere passion for helping people, Aaron has the expertise and affinity for serving the unique needs of those in transition. Clients benefit from his objective financial solutions and education aligned solely withhelping them pursue the most comfortable financial life possible.Born in Olympia, Washington, Aaron spent much of his childhood in Denver, Colorado. An area outside of Phoenix, Arizona, known as the East Valley, occupies a special place in Aaron’s heart. It is where he graduated from Arizona State University with a Bachelor of Science degree in Business Administration, started a family, and advanced his professional career.Having now returned to his hometown of Olympia, and with the days of coaching his sons football and baseball teams behind him, he now has time to pursue his civic passions. Aaron is proud to serve on the Board of Regents Leadership for Thurston County as the Secretary and Treasurer for the Morningside area. His past affiliations include the West Olympia Rotary and has served on various committees for organizations throughout his community.Aaron and his beautiful wife, Holly, a Registered Nurse, consider their greatest accomplishment having raised Thomas and Tate, their two intelligent and motivated sons. Their oldest son Tate is following in his father’s entrepreneurial footsteps and currently attends the Carson College of Business at Washington State University. Their beloved youngest son, Thomas, is a student at Olympia High School.Focused on helping veterans and their families navigate the maze of long-term care solutions, Aaron specializes in customized strategies to avoid the financial crisis that care related expenses can create. Experience has shown him that many seniors are not prepared for the economic transition that takes place as they reach an advanced age.With support from the American Academy of Benefit Planners – an organization with expertise and resources on the intricacies of government benefits – he helps clients close the gap between the cost of care and their income while protecting their assets from depletion.Aaron can help you and your family to create, preserve and protect your legacy.That’s making a difference.
Disclosure:
Disclosure:Investment advisory services are offered through BWM Advisory, LLC (BWM). BWM is registered as an Investment Advisor located in Scottsdale, Arizona, and only conducts business in states where it is properly licensed, notice filed, or is excluded from notice filing requirements. BWM does not accept or take responsibility for acting on time-sensitive instructions sent by email or other electronic means. Content shared or published through this medium is only intended for an audience in the States the Advisor is licensed in. If you are not the intended recipient, you are hereby notified that any dissemination, distribution, or copy of this transmission is strictly prohibited. If you receive this communication in error, please immediately notify the sender. The information included should not be considered investment advice. There are risks involved with investing which may include market fluctuation and possible loss of principal value. Carefully consider the risks and possible consequences involved prior to making an investment decision.Confidential Notice and Disclosure: Electronic mail sent over the internet is not secure and could be intercepted by a third party. For your protection, avoid sending confidential identifying information, such as account and social security numbers. Further, do not send time-sensitive, action-oriented messages, such as transaction orders, fund transfer instructions, or check stop payments, as it is our policy not to accept such items electronically. All e-mail sent to or from this address will be received or otherwise recorded by the sender’s corporate e-mail system and is subject to archival, monitoring or review by, and/or disclosure to, someone other than the recipient as permitted and required by the Securities and Exchange Commission. Please contact your advisor if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services. Additionally, if you change your address or fail to receive account statements from your account custodian, please contact our office at [email protected] or 800-779-4183.
