How an annuity can help you save for retirement

What’s an annuity?

An annuity is a financial product that can generate regular income payments in retirement, either for a set number of years or for life. It’s an insurance contract and is available with:
  • A variety of investment choices
  • No taxes due on any growth until you take money out

Why might I need an annuity?

An annuity can help you decrease the risk that you’ll run out of money in retirement. In fact, an annuity is the only financial product that can guarantee income for the rest of your life.1 Today’s retirees are faced with many financial challenges, including living longer, retirements that can last 30 years or more, market uncertainty, and rising medical costs. An annuity, as part of your overall retirement strategy, can offer lifetime income and help fill any income gaps.

How do I purchase an annuity?

Two ways:
Retirement plan annuity through your employer: Money you put in an employer-sponsored retirement account is generally pretax, which means that your taxable income is reduced by the amount you put in. Any growth in retirement plan contributions is tax deferred, so you won’t pay taxes until you take money out, generally in retirement when you may be in a lower tax bracket.2

Personal annuity purchased on your own: This may be a good option to save more if you’ve maxed out your contributions to retirement savings accounts like employer-sponsored retirement plans and IRAs. Since you’ve already paid taxes on the money you put in, only growth is taxed—and not until you take money out.3

How does an annuity work?

An annuity has two phases:
Accumulation phase: Period during which you make contributions with the goal of building up the cash value of the annuity.
Distribution phase: Period during which you receive money from your annuity.

What are my investment options?

Annuities come in many varieties. The right one for you depends on your goals. Annuity investment options generally fall into one of these three categories:
  1. Variable annuities: You generally have investment choices that include the major asset classes and that may reflect your own time horizon, tolerance for risk and other factors. The rate of return of a variable annuity depends upon the market performance of its underlying investments. That means that certain risks apply, including the possible loss of money you invest.
  2. Guaranteed annuities: These provide the stability of a guaranteed interest rate, based upon the claims-paying ability of the issuing company, the potential for additional amounts, and protection of your principal.
  3. Fixed index annuities: These provide a guaranteed interest rate that’s based on a specified equity-based index (like the S&P 500®).4 The goal is to provide an opportunity for greater returns than a guaranteed annuity without the investment risk of a variable annuity.  However, certain risks apply.  It is possible to lose money investing in fixed annuities.

What are my income options?

Common annuity income options include:
  • Income for a defined period of time
  • Income guaranteed for the rest of your life or for your and your spouse’s/partner’s life (or a combination of both)
  • Lump sum payment
You should consider the investment objectives, risks, charges and expenses carefully before investing. Please call 877-518-9161 or log on to for underlying product and fund prospectuses that contain this and other information. Please read the prospectuses carefully before investing.
1 Guaranteed lifetime income is available if you choose a lifetime income option. Income payments are subject to the claims-paying ability of the issuing company.
2 Any withdrawals made prior to age 59½ may be subject to an additional 10% penalty in addition to ordinary income tax. Please note that an annuity does not provide any additional tax-deferred treatment of earnings beyond the treatment of earnings provided by the tax-qualified retirement plan.
3 Withdrawal of earning prior to age 59½ may be subject to an additional 10% penalty, in addition to ordinary income tax.
4 The annuity contract does not invest directly in the index.
This material is for informational or educational purposes only and does not constitute a recommendation or investment advice in connection with a distribution, transfer or rollover, a purchase or sale of securities or other investment property, or the management of securities or other investments, including the development of an investment strategy or retention of an investment manager or advisor. This material does not take into account any specific objectives or circumstances of any particular investor, or suggest any specific course of action. Investment decisions should be made in consultation with an investor’s personal advisor based on the investor’s own objectives and circumstances.