Fixed and Variable Annuities

Annuities are contracts between you and an insurance company that can provide you income through a unique combination of investment and insurance features. Annuities can complement other retirement plans and, depending on what type you select, they may provide guaranteed lifetime income, opportunities for tax-deferred growth, flexible withdrawals, and legacy protection for your beneficiaries. Guarantees are subject to the financial strength and claims-paying ability of the issuing insurance company.

When purchasing an income annuity, your assets become a guaranteed income stream for life, or for a specific period of time. Many clients purchase income annuities to cover their essential expenses, as defined by them, in retirement. For an additional cost, income annuities may offer a cost-of-living-adjustment, increasing your income each year, to help address inflation risk.

PSS offers two types of income annuities: single premium immediate annuities and deferred income annuities. The key difference between these two product types is when income begins. For single premium immediate annuities, income generally begins “immediately”, whereas for deferred income annuities, the income doesn’t begin for at least 13 months from your last premium payment, but may be deferred by up to 40 years.

Fixed annuities, sometimes referred to as fixed deferred annuities, provide guaranteed asset growth at a fixed rate for a specific time period. The growth is tax-deferred which can help you accumulate more assets instead of paying taxes during the accumulation phase, and your assets are protected from market uncertainty. If you elect to receive guaranteed income, you can choose income for life or for a specific time period.

Fixed indexed annuities provide principal protection with the option for fixed rate returns (similar to a fixed annuity), or capped growth dependent on a preselected market index over a specific period of time – you are not directly invested in the market. If the index is up, then yield is credited to your account up to a capped percentage. If the index is down, then your principal will not lose value (i.e. 0% return). The growth is tax-deferred which can help you accumulate more assets instead of paying taxes during the accumulation phase. If you elect to receive guaranteed income, you can choose income for life or a specific time period.

With a variable annuity, investments, often called sub-accounts, are chosen from within the annuity. The performance of the investments determines the value of the account and subsequently, the amount of income you will receive. The growth of the investments is tax-deferred which can help you accumulate more, instead of paying taxes during the accumulation phase. If you elect to receive guaranteed income, you can choose income for life or for a specific time period.