Know What You Own and Why
Know What You Don't Own and Why NOT
VA-Variable Annuity w Guaranteed Lifetime Income Rider
FIA Fixed Indexed Annuity w Guaranteed Life Income Rider
Guaranteed Lifetime Income (joint or single) aka Single Premium Immediate Annuity (SPIA)
Give up capital / no access to purchase price
NB #1: Above chart indicates potential availabilities at the time of writing. Products change frequently. Products from different sponsors frequently differ. Products with identical names from the same sponsor but issued at different times might also differ.
NB #2: The annuity article footnoted below is included because I feel it is even-handed. The investment marketplace has historically seemed to have been more "pro-consumer" than the insurance marketplaces. But insurance is catching up. It is possible that certain insurance products might continue to only be available by paying a commission. But that is no longer true for "advisory" versions of VA's and FIA's, both of which are now available on a fee-only aka "advisory" basis. Some of the articles I researched for this post did not take this trend into account. The insurance world has long offered certain protections that the "pure" investment world previously did not. While structured products have not been included in these recent posts about models, ironically they now resemble insurance products more than traditional investment products. More complexity, but more protection. Your goals and values are the most important!
1. March 17, 2020 A Primer on Annuities by Mark Miller on Morningstar.com https://www.morningstar.com/articles/972416/a-primer-on-annuities
2.. Feb. 27, 2019 Video Speech of Robert Shiller https://www.youtube.com/watch?v=RpbW_kQdc-w
3. July 9, 2014. Stanford GSB (Graduate School of Business. Jonathan Berk: "Are Mutual Fund Managers Skilled or Just Lucky?
Annuities are insurance contracts that, depending on the contract, may offer a guaranteed annual interest rate and some participation growth, if any, of a stock market index. Such contracts have substantial variation in terms, costs of guarantees and features and may cap participation or returns in significant ways. Any guarantees offered are backed by the financial strength of the insurance company, not an outside entity. Investors are cautioned to carefully review an annuity for its features, costs, risks and how they are calculated.
There is a surrender charge imposed generally during the first 5 to 7 years that you own the contract. Withdrawals prior to age 59½ may result in a 10% IRS tax penalty, in addition to any ordinary income tax.
For a comprehensive review of your personal situation, always consult with a tax or legal advisor. Neither Cetera Advisors LLC nor any of its representatives may give legal or tax advice.
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The return and principal value of bonds fluctuate with changes in market conditions. If bonds are not held to maturity, they may be worth more or less than their original value. US Government securities are backed by the full faith and credit of the US Government as to the timely payment of principal and interest. The principal value will fluctuate with changes in market conditions. If they are not held to maturity, they may be worth more or less than their original value.
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