Not happy with the return you are getting on your investments?  Want to defer taxes on your gains?  Want to experience the ups of the stock market but avoid this risk of the down times?  Why not invest in the same retirement vehicle that the government and teachers use? An annuity is the answer!

Annuities are financial vehicles sold through insurance companies that can pay a regular stream of income when you retire. They provide a structured way to plan for retirement and offer tax-deferred advantages on the interest you earn. Annuities can also provide immediate payout of funds, giving you a vehicle for pension funds, Traditional IRAs, SEP plans, etc.

Indexed Annuity
An equity-indexed annuity is a fixed, tax-deferred annuity. What makes this type of annuity different is how the gains are credited. Instead of crediting a company-declared interest rate of say 4, 5 or 6 percent, the gains are linked or indexed directly to the growth performance of a leading stock market index, such as the S&P 500. Like other fixed annuities, there is a 100% guarantee of principal plus minimum interest (usually around 3 percent). An individual cannot lose a penny, as long as he or she stays in the contract for the full contract term. Unlike other fixed annuities, however, the owner has the potential to make more money if the index goes up.  And if the index goes down? No problem - the owner does not lose anything and is still guaranteed 100% of principal plus minimum interest. (And because there are no sales charges, management fees, expense charges or mortality costs, 100% of the premium is used to accumulate funds. Plus, equity-indexed annuities are tax deferred, so no tax is paid on the gains as long as those gains remain in the contract.) Basically, equity-indexed annuities provide an incredible opportunity to invest in the stock market with absolutely no risk!

Deferred Annuity
The return on deferred annuity contributions is tax-deferred until the annuity payout begins, usually at retirement. Generally, with a deferred annuity, you start with as little as $50, and make contributions on a monthly or annual basis. The more you contribute, the more your annuity grows. You can also set up a deferred annuity with a single payment. Your single contribution continues to grow until the specified payout time. If you should die before receiving annuity payouts, your named beneficiary receives the total of your contributions plus earnings in the annuity.

Immediate Annuity
This is a single payment annuity often purchased by people who are ready to retire. It is a way to ensure an income stream from the proceeds of a pension plan, Traditional IRA or other retirement vehicle. The level of monthly income depends on the amount of time the annuity payouts are to be continued -- 10 years, 20 years or for the rest of your life.

Comparing an Annuity with a CD
Mortality studies show people are living longer and will need to increase savings to supplement Social Security. Annuities offer the advantage of being tax-deferred until distributed. Distribution usually occurs when the annuitant is retired and in a lower tax bracket. Interest on a CD is taxable every year interest is earned.

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