Our Services: Annuities

Understanding Annuity Basics

An annuity is an agreement with an organization for you to receive fixed payments of money over time. Typically, an annuity product allows you to receive guaranteed* payments for the rest of your life. Additionally, you decide when to receive payments: monthly, quarterly, or annually. An annuity differs from a retirement plan account. As an insurance product, it comes with different benefits. Furthermore, there are different types of annuities that come with different features.


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Annuity Basics

The risks associated with an annuity product vary based on its type. For example, some annuities don’t lose money if the stock market drops, while others are at risk of this. A fixed indexed annuity (FIA) is protected in the event of a stock market decline, while a variable annuity could lose money. Because we believe in safety as a core value, GreenLine Retirement, LLC recommends that you select an annuity product that keeps your money protected, and includes a reasonable rate of return.** An FIA is an example of a product like this.

Fixed Indexed Annuity Basics

To reiterate, an FIA has the benefit of keeping your principal protected. This is because the ups and downs of the stock market don’t negatively impact it. Instead, you contribute a certain amount of money, and the insurance company that issues the annuity agrees to pay you an interest rate based on an index. The money you pay to them is set aside in a reserve so that, no matter what happens in the market, it’s protected*. There is also a fixed term and a pre-defined schedule for payments.

Your money isn’t invested directly, but an FIA is linked to the stock market. You have the ability to gain a reasonable rate of return** when the market is up. This is an important feature, as it ensures that you won’t run out of money, and will receive a guaranteed* string of payments for the rest of your life. If you ask us, having both safety and a reasonable rate of return** are crucial to any sound financial retirement strategy.

Annuity Stages

Accumulation Stage

This is the time during which you allow your annuity to grow. It starts when you sign your annuity contract. Your annuity will grow based on its type: Fixed annuities earn a specific fixed interest rate. Variable annuities grow based on the stock market, but lose value if the market goes down. Finally, FIAs allow you to earn a reasonable rate of return** and also keep your money safe. In this way, an FIA is what we would call “the best of both worlds.” Regardless of the type, however, an annuity needs time to grow. This is what the accumulation stage is. The time when you can begin taking payments is outlined in the contract. However, there aren’t required minimum distribution (RDMs) on an annuity. This means that you can, if you want, let your annuity continue to grow.

Distribution Stage

This stage begins when you can take income from your annuity. Similar to the accumulation phase, the terms depend on your specific product. For example, how much money you can take out, and when. The terms also vary based on the individual contract and your choices. You have options, like receiving payments annually, quarterly, or monthly. The term of your annuity contract could be a lifetime term. You may decide not to withdraw money yet, and let your annuity grow further.

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Is an annuity the right financial vehicle for you? It all depends on your financial situation and retirement goals and needs. Reach out to us for a one-on-one meeting to talk about your situation. Or, if you’d like to learn more about these products and the various things that impact your retirement, all at no cost, join us for a seminar event. You’ll learn important information at these events and enjoy a complimentary gourmet dinner. Reach out to us if you’d be interested in attending.

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