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STORM SEASON
Important Note:

June through November our agency may become prohibited from binding coverage should a “Tropical Disturbance” enter the Gulf of Mexico or Caribbean Sea.

In these cases we may be unable to bind new coverage quoted in open proposals until the storm leaves our area and our binding authority has been restored.

Please arrange your coverage protection early to avoid this type of delay. While we regret any inconvenience, the carriers impose these restrictions on all agencies.

Three Thoughts on Annuities That May Work for You

Annuities are complex and usually poorly understand. Let’s dig deeper into what an annuity is, what it isn’t, and strategies you may want to consider.

Let’s begin with Investopedia.com. If you haven’t heard of this site before, it is worth bookmarking. It offers fantastic information on finance including definitions. In fact, their definition for an annuity is solid.

They describe it as being:

“An annuity is a contractual financial product sold by financial institutions that is designed to accept and grow funds from an individual and then, upon annuitization, pay out a stream of payments to the individual at a later point in time. The period of time when an annuity is being funded and before payouts begin is referred to as the accumulation phase. Once payments commence, the contract is in the annuitization phase.”

If you understood this definition, then you’re probably on board with the idea of raising cash and then developing a stream of revenue to support your retirement.

Put simply: Annuities allow individuals the ability savings that are tax deferred. They can also help to protect what you’ve already saved. And They can generate a steady stream of income in retirement.

If you can do this with a secure method then it’s well worth your time. The challenge is that not all annuities are created equally so it is important that you get good advice from your financial advisor before diving headlong into an annuity.

Which brings up these alternative strategies…

Delay Social Security

Ok, so Social Security isn’t an annuity per se. But postponing the time when you take Social Security is just like purchasing an inflation-adjusted cash flow that you can draw on just a few years later than you’re expecting. To give you an idea of what this is, it’s simply a U.S. federal government annuity. If you delay social security from age 66 to age 70, your month-to-month advantage is going to be an increased payment of up to 32%. That 32% also has a yearly price of living modification so that will also increase with time. In one example, delaying social security for four years would raise a person’s payment by $987 each month. In order to have the extra money, you would have had to pay $126,000 into retirement funds over those four years. However, if you’re interested in getting an inflation-adjusted higher monthly payment, starting in four years would set you back about $235,500 today for a 66-year old person. In short, this means that this government annuity was priced at 46% less than you could get on a competitive market.

Employer Pensions

Many people have a pension plan that they can start receiving at retirement. Many public or government employees have a pension plan option. Some businesses still offer pensions as well. Usually, at retirement age, you’ll have the choice to either take a lump-sum repayment which can be rolled over into an IRA or take a month-to-month repayment. (Typically with survivor benefits.) In most cases, the repayments are insured by the Pension Benefit Assurance Corporation. Contrasting the lump-sum settlement to the monthly repayment, the pension plan annuity payment is usually the best option 75% of the time.

TIAA Traditional Annuity

Today, over 3.7 million people who work at non-profit companies have their retirement accounts at TIAA. One of the alternatives to purchase is known as the TIAA Traditional Annuity. Many of these participants have access to a guaranteed 3% annual growth that will provide them with either a lump-sum payment or an income stream on retirement that is actually available with competitive rates. In reality, rates over the past year have been more than the 3% guarantee. With money-market funds and CDs paying so little, it’s actually often a good alternative for folks today.

Regardless of the options you choose, the best place to begin is to have a chat with someone on our team to help you understand your options, put you in touch with the best information and resources available, and help you make certain you are making sound decisions for your future.