FIXED ANNUITIES
As retirement guarantees become scarce, fixed annuities gain more attention.

In an age when new defined benefit pension plans and the guaranteed retirement income they provide are becoming scarce and experts question the  long-term viability of social security, there seems to be few guarantees regarding financial security in retirement.

One guarantee however, has attracted increased attention - the fixed annuity's guarantee of an income you can't outlive.* According to the Employee Benefit Research Institute's 17th Annual Retirement Confidence Survey, half of workers saving for retirement have total savings and investments of less than $25,000.** Many employees have saved more but the potential problem, even for diligent savers, is how to make the money last in retirement.

Enter the fixed annuity, a long-term, tax-deferred contract with a life insurance company into which you typically contribute a lump sum or a series of contributions in return for guaranteed income in retirement. You determine how long the guaranteed income lasts.

Some people may decide to take a lump sum from the annuity upon retirement. Others choose a fixed period - called period certain - which may be 5, 10, 20 or more years. The advantage of this option is that beneficiaries receive the remaining payments if the person dies before the period is up.

Another alternative is gaining most of the attention these days - guaranteed lifetime income. With this option, you cannot outlive your benefits.

Most annuities give you the option to take payments for your lifetime or for as long as you and another person - usually a spouse - may live. The latter alternative, called a joint and survivor option, ensures that a loved one continues to receive income after you're gone.

While guaranteed income is certainly a primary advantage of fixed annuities, it isn't the only one. They earn a guaranteed interest rate. Like a 401(k) plan balance, no tax is due on an annuity until you take withdrawals. Unlike most qualified retirement plan balances, annuities don't require you to start taking payments at age 70 1/2.

Fixed annuities can play an important role in your retirement readiness in a number of ways. If you want a guaranteed returns, fixed annuities offer it. If your 401(k) plan doesn't offer a pension annuity option and you want guarantees not found among the plan's options, you might consider a tax-deferred rollover to an IRA annuity. And most important, a fixed annuity is the only financial vehicle that offers a guaranteed stream of income for life, should you choose this option.

Life offers few guarantees but fixed annuities offer one of the few. Talk to me to learn more.

*Guarantees are subject to the claims-paying ability of the issuing company. Generally annuity contracts have limitations and a charge for early withdrawals. Withdrawals are subject to income tax and a 10% federal income tax penalty may apply to withdrawals prior to age 59 1/2.

** EBRI 17th Annual Retirement Confidence Survey based on telephone interviews conducted in January 2007 with 1252 Americans aged 25 and older.