Our Retirement Philosophy
Annuities provide a level of security and stability that other investment options often can’t match. They are designed to shield your savings from market downturns, provide guaranteed income, and help you build a solid financial foundation for your retirement years. Much like selecting the right club for a crucial shot, choosing the right strategy can make all the difference in achieving your financial goals. Read on about the many annuity benefits!
Annuity Benefits
Protection Against Market Volatility
Unlike stocks or mutual funds, fixed and fixed indexed annuities protect your principal from the ups and downs of the market. When the market is booming, you can benefit from growth. When the market dips, your principal remains untouched.
Tax-Advantaged Savings
Annuities offer tax-deferred growth, which means your investment can grow faster because you don’t pay taxes on your earnings until you start receiving payments or taking free withdrawals. This helps maximize the power of compound interest, ensuring your retirement savings work harder for you.
Ease of Legacy Planning
With annuities, you can name beneficiaries to receive the remaining balance upon passing, ensuring your loved ones are taken care of without the hassle of probate. This makes annuities not only a smart tool for retirement but also a straightforward way to pass on wealth.
Tailored to Your Needs
Every retirement plan is unique, and annuities can be customized to fit your specific needs. Whether you’re looking for a lifetime income stream, a fixed period of payments, or an opportunity for growth, there’s an annuity designed to match your goals. A blend of multiple annuities is always an option too; meaning you can designate portions of your savings to accomplish separate goals. With the right strategy, you can create a balanced plan that integrates flexibility and security.
Strong Growth Potential
Some annuities are designed to focus on growth rather than immediate income. These options allow your account value to increase over time tracking an index like the S&P500, providing the potential for higher returns without the risk of losing your principal. This is ideal for those who want to continue building wealth while still protecting themselves from market volatility.
No Contribution Limits
Unlike other retirement accounts, such as IRAs or 401(k)s, annuities do not have contribution limits. This allows you to invest as much as you want to grow your savings or build your future income; making it a flexible option for those who want to maximize their savings.
Reliable Income Options
One of the greatest concerns for retirees is the fear of outliving their savings. Annuities can address this by providing a steady, predictable stream of income, ensuring you always have a financial safety net. Whether you need income for a fixed period or for life, annuities offer peace of mind by eliminating the guesswork.
Fairway Tip: ⬇
Transferring funds from a 401(k) or IRA into an annuity is considered a “qualified rollover” and is not a taxable event. In simple terms, you won’t owe taxes just for making the transfer. This allows you to move your retirement funds without triggering any immediate tax liabilities.
Note: When planning for retirement income, consider these key factors:
Your Age and Health: Life expectancy is increasing, and you could spend many years in retirement.
Sources of Retirement Income: Review all sources, including Social Security, pensions, IRAs, 401(k)s, and annuities.
Inflation: Plan for inflation to ensure your income keeps up with the cost of living.
Fairway Tip:
Some annuities offer options that guarantee growth of the death benefit for your beneficiaries. For instance, if you have an account valued at $100,000 that you’d like to leave behind, certain solutions can guarantee a 7% annual increase on the death benefit for up to 15 years. This provides valuable guarantees and can be an ideal solution for individuals who may not qualify for life insurance
Our approach at Fairway Retirement focuses on understanding your unique needs and planning for both the expected and the unexpected.
Thoughts to consider
Whether you are about to retire, or are already in retirement, it’s essential to ask yourself a few key questions:
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What is your time horizon? How long do you need your savings to last?
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Have you thought about how you will spend down your savings once you stop working?
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What level of risk are you comfortable with, and does your current strategy align with that?
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What portion of your savings would you like assurance of zero risk on?
By answering these questions, you can start to build a solid strategy that minimizes risk and maximizes your financial future. At Fairway Retirement, we’re here to guide you through every step, helping you find the right annuities that align with your retirement vision. We believe that with the right approach, your financial future can be as steady and reliable as a well-played game of golf.
Annuities: Benefits and Riders – Choosing the Right Features
Annuities can be tailored to fit your needs with additional features, called riders.
Some of the most common are:
Lifetime Income Rider
Provides a guaranteed income stream for life, just like a pension. Even if your account balance runs out, this rider ensures you keep receiving income. This can provide income for a single person’s lifetime, or for both a husband and wife’s lifetime. This ensures no spouse is left with a reduction in income!
Enhancement Rider
Boosts potential returns within your annuity, giving you more upside potential for a fee. For instance, an enhanced rider might allow you to earn a higher return compared to a standard cap/participation rate. Example: Instead of a cap rate of 8% in the annuity tracking the S&P 500, the enhancement rider would receive a cap of 12%.
Liquidity Rider
Offers flexibility for unexpected needs. You can withdraw beyond the standard 10% in a given year, up to 20% or more without penalty. For example, if you don’t withdraw funds one year, you may be able to withdraw 20% the next.
Deposit Bonus
Add an immediate increase to your account up to 20%. This helps you to recover any recent losses you’ve sustained, or to make up for low growth in your prior account.
By understanding these options, you can choose an annuity that provides the right blend of security and flexibility. Our advisors at Fairway Retirement are here to explain these features and help you select the ones that suit your retirement vision.
How Annuity Bonuses Work
An annuity bonus is essentially an extra percentage that the insurance company adds to your initial premium. For example, if you invest $100,000 into an annuity with a 10% bonus, your account value would start at $110,000. This bonus is designed to give your retirement savings an immediate boost, helping you grow your nest egg faster
These bonuses can be particularly beneficial if you’re looking to catch up on your savings or want to maximize your investment from the start. Here are a few ways annuity bonuses can enhance your retirement plan:
Immediate Account Growth
The bonus is added to your account right away, giving your principal a higher starting point. This can be especially helpful if you’re transferring funds from a low-interest account or a poorly performing 401(k). It’s like getting an extra shot on the fairway that puts you closer to the hole, helping you reach your goals faster.
Offsetting Early Surrender Charges
If you’re moving funds from an existing account that has early surrender charges, an annuity bonus can help offset those fees. This makes the transition smoother and ensures that your savings continue to grow without losing value.
Flexibility Based on Your Needs
Annuity bonuses can vary depending on the product and your financial goals. Some bonuses may be smaller but offer more flexibility, while others may be larger but come with certain conditions or longer holding periods. At Fairway Retirement, we work with you to find the right balance that aligns with your retirement strategy.
Fairway Tip: ⬇
Transferring funds from a 401(k) or IRA into an annuity is considered a “qualified rollover” and is not a taxable event. In simple terms, you won’t owe taxes just for making the transfer. This allows you to move your retirement funds without triggering any immediate tax liabilities.
Things to Consider with Annuity Bonuses
While bonuses can be a great way to jump-start your savings, it’s important to understand the details:
Bonus Vesting Period
Some bonuses come with a vesting period, which means you may need to keep your money in the annuity for a certain number of years to fully benefit from the bonus. If you withdraw funds early, you might not receive the full bonus amount.
Impact on Fees and Payouts
Some annuities with higher bonuses may also come with higher fees or specific payout terms. It’s essential to review these details to ensure the product aligns with your overall financial plan.
Get Back on the Fairway with Fairway Retirement
Bonuses are just one of the many tools that can help you secure a brighter financial future. We understand that everyone’s situation is unique. Whether you need a little extra boost to get back on track or want to maximize your initial investment, our team is here to help you find the best solution. We’ll guide you through the process, ensuring that your annuity choice gives you the stability, growth, and flexibility you need to enjoy your retirement with confidence.
Dispelling Annuity Myths – Setting the Record Straight
There are many myths and misconceptions about annuities that can make it difficult to understand their true value. At Fairway Retirement, we believe in providing clear, accurate information so you can make well-informed decisions. In this chapter, we’ll address some of the most common myths about annuities and explain why they might not be entirely true.
Myth #1: All Annuities Have High Fees
Reality: Not all annuities have high fees. While some annuities, such as variable annuities, can have higher fees due to investment management and additional features, others, like fixed and fixed indexed annuities, often have little to no annual fees. It’s important to understand the type of annuity you are considering and what fees, if any, are associated with it. At Fairway Retirement, we focus on transparent, fee-friendly options that align with your financial goals.
Myth #2: If I Pass Away, the Insurance Company Keeps All the Money
Reality: This is a common concern, but it’s not true for most annuities. Many annuities allow you to name a beneficiary, ensuring that if you pass away, the remaining balance goes to your loved ones. Certain types of annuities, like those with lifetime income riders, may have different terms, but Fairway Retirement prioritizes products that offer a death benefit, so your family is protected.
Myth #3: I Could Lose All My Money in Annuities
Reality: Unlike the stock market, fixed and fixed indexed annuities protect your principal. Your money is not exposed to market risk, so you won’t lose your principal due to market downturns. While the funds in a variable annuity can fluctuate with the performance of its underlying investments, other types of annuities are designed specifically to safeguard your savings. Think of it as a safety net that keeps your retirement funds secure.
Myth #4: I Won’t Have Access to My Money if I Buy an Annuity
Reality: Annuities do have certain terms, but that doesn’t mean you won’t have access to your funds. Many annuities allow for penalty-free withdrawals up to a specific percentage each year. Additionally, some annuities offer liquidity riders that give you even more flexibility. It’s all about choosing the right product that fits your needs, and we can help you find options that provide access when you need it most.
Myth #5: I Have to Pay the Agent a Fee
Reality: In most cases, you do not pay an agent directly when you purchase an annuity. The annuity company compensates the agent, so there are no upfront or ongoing fees taken out of your investment to pay the agent. Contrast this to other brokerage companies that have ongoing annual fees. This means your money is working fully for you from day one. At Fairway Retirement, we believe in full transparency, so you’ll know exactly how your investment is being managed.
Myth #6: I’ve Always Heard Annuities Are Bad
Reality: Annuities have received a bad reputation over the years due to misunderstandings and some poorly structured products in the past. However, not all annuities are created equal. With the right guidance, annuities can be a powerful tool for building a secure and reliable retirement. The key is to work with a knowledgeable advisor who can help you navigate the different options and find the right fit for your financial situation. At Fairway Retirement, we specialize in safe, stable annuities that offer clear benefits.
Myth #7: Why Does My Broker Not Like Annuities?
Reality: Brokers who primarily sell stocks, mutual funds, or other investments may not recommend annuities because they are less familiar with them or because annuities don’t fit into their typical business model. It’s possible your broker doesn’t have the expertise to explain the benefits. Additionally, many brokerages do not allow their brokers to sell fixed or indexed annuities. At Fairway Retirement, we focus on what’s best for your retirement plan, including safe, reliable annuity products that can complement other investments you may already have.
The Truth About Annuities
Annuities can be an incredibly effective way to secure your financial future, but it’s essential to understand the facts and separate them from the myths. By addressing these common misconceptions, we hope to provide you with the clarity you need to see how annuities can fit into your retirement strategy. At Fairway Retirement, we’re committed to educating our clients and offering straightforward, easy-to-understand solutions. If you have questions or concerns, we’re here to provide honest answers and help you make the best decisions for your financial future.
Real-Life Stories – How Annuities Helped Our Clients
Story 1: Safe, Steady Growth with a Fixed Annuity
Problem/Obstacle
John and Susan, both nearing retirement, were concerned about the low interest rates from their savings accounts. They were frustrated that their money wasn’t growing fast enough, and the volatility of the stock market made them anxious about risking their hard-earned savings. They wanted a solution that would offer reliable, predictable growth without the fear of losing their principal.
Solution
After consulting with us at Fairway Retirement, John and Susan decided on a fixed annuity offering a 6% interest rate locked in for 7 years. This provided them with stable, predictable growth, helping them accumulate a comfortable nest egg without losing sleep over market volatility. With this fixed annuity, they had peace of mind knowing exactly how much their savings would grow each year, allowing them to plan their retirement confidently.
Story 2: A Lifetime Income Michael Couldn’t Outlive
Problem/Obstacle
Michael, a 65-year-old retiree, was worried about outliving his savings. He had diligently saved over the years but didn’t have a clear plan for turning his savings into a sustainable income stream. With life expectancy increasing, he was afraid he might run out of money in his later years, especially if unexpected expenses came up.
Solution
After discussing his concerns and retirement goals with us, we recommended a fixed indexed annuity with a lifetime income rider. This annuity guaranteed Michael a steady stream of income that would continue for the rest of his life, no matter how long he lived. Now, he enjoys his retirement with confidence, knowing that his basic living expenses are covered for life. The annuity eliminated his fear of running out of money, providing financial stability and peace of mind with a lifetime income Michael couldn’t outlive.
Story 3: Julie Achieves Peace of Mind
Problem/Obstacle
Julie had been heavily invested in the stock market, but the constant volatility made her anxious. After experiencing significant losses during a market downturn, she wanted a solution that would allow her to capture potential gains without risking her principal. She needed a way to grow her wealth without the stress of watching the market every day.
Solution
After consulting with us, Julie chose a fixed indexed annuity tied to the S&P 500. In years when the market performed well, her annuity benefited from strong returns, but when the market dipped, she didn’t lose a penny. This annuity provided the perfect balance of growth potential and protection. Julie finally achieves the peace of mind that came with knowing she wouldn’t lose money, combined with the opportunity for growth, which made all the difference for her. Now, Julie can focus on enjoying her retirement without the stress of market volatility.
These examples highlight how different types of annuities can address specific challenges and provide tailored solutions. At Fairway Retirement, we work closely with our clients to understand their unique needs and recommend the right annuity products to help them achieve a secure and fulfilling retirement.
Conclusion – Keeping it on the Fairway
Annuities provide safety, stability, and guaranteed income—making them an essential part of a well-rounded retirement plan. Just as a balanced golf game requires precision and strategy, so does retirement planning. Fairway Retirement is here to guide you every step of the way, ensuring your financial future stays on course.
Glossary of Annuity Terms – A Quick Reference Guide
Annuitant
The person on whose life the annuity contract is based. The annuitant typically receives the income payments from the annuity.
Annuitization
The process of converting the accumulated funds in an annuity into a stream of periodic income payments, either for a fixed period or for the lifetime of the annuitant.
Death Benefit
The amount paid to a beneficiary when the annuitant passes away.
Deferred Annuity
An annuity where payments or withdrawals begin at a future date, allowing the funds to accumulate during the deferral period.
Fixed Annuity
An annuity that offers a guaranteed interest rate for a set period of years, providing predictable and stable growth. Also know as a MYGA (Multi Year Guaranteed Annuity)
Fixed Indexed Annuity
An annuity where returns are tied to a market index (like the S&P 500), offering the potential for growth while protecting
the principal from market downturns.
Immediate Annuity
An annuity that starts paying out income immediately after a lump-sum investment.
Accumulation Phase
The period during which the money in an annuity grows before payouts begin. This phase is particularly relevant for deferred annuities, where your funds accumulate tax-deferred.
Payout Phase
The period during which an annuity begins making regular payments to the annuitant. This is typically after the accumulation phase and can be structured for a fixed period or the lifetime of the annuitant.
Rider
An optional add-on to an annuity contract that provides additional benefits or features, such as a lifetime income rider or enhanced death benefit. Riders may come with an additional cost.
Lifetime Income Rider
An additional feature that guarantees a steady income stream for the life of the annuitant(s), that can not be outlived.
Liquidity Rider
A rider that allows annuity holders to withdraw funds without penalty under specific conditions, offering more flexibility to access funds if needed.
Penalty Free Withdrawals
Annuities typically allow 10% penalty free withdrawals every year as needed at no additional cost.
Surrender Charge
A fee charged for withdrawing funds from an annuity in excess of the penalty free amount, before the end of the surrender period, which is usually a set number of years. Surrender charges decline over time and eventually disappear.
Tax-Deferred Growth
Annuities offer tax-deferred growth, meaning you won’t pay taxes on earnings until you begin receiving payments. This allows your savings to grow faster since they are not reduced by taxes each year.
Participation Rate
The percentage of the index’s gain that is credited to a fixed indexed annuity. For example, if the index grows by 10% and your participation rate is 80%, you receive 80% of the growth, meaning your account would be credited with 8%.
Cap Rate
The maximum rate of interest that can be credited to an annuity during a specified period. For example, if your index grows by 10% and your cap rate is 6%, your account would be credited 6%.
Bonus
An additional percentage that some annuities offer upfront, added to the initial investment. For example, a 12% bonus on a $100,000 investment would increase the initial account value to $112,000.