Americans’ Retirement Security Box - Annuity
As a type of retirement savings investment tool, also known as the "security box" for conservative investments. All U.S. annuities are issued by insurance companies, and annuities is a type of life insurance. To put it simply, annuity is a contract between investors and the insurance companies. Investors can pay the amount of investment to insurance companies at one time or multiple times, and insurance companies promises to regularly give a fixed amount of money to investors. All insurance is used to avoid and transfer risk, annuities as a life insurance is a person because life is too long, the so-called Longevity risk.
According to the U.S. Social Security Administration in 2000, at least one of the four 65-year-old men could live to 92, four 65-year-old women at least one could live to 94, and at least one of the four 65-year-old couples could live to 97. The extension of life expectancy is the embodiment of social progress, but it is accompanied by new social problems. In the past, people's pensions were enough to cover the cost of 10 to 15 years of retirement, but how to get old after the age of 80 is now a question that older people have to face. The aging of society leads to the government-provided pension is facing a failure, and the probability of aging is greatly increased along with the risk of long-term care, which invisibly increases the financial burden of old-age medical and long-term care.
Most Americans now rely on the 401K plan they offer to save or invest in their retirement account. As the 401K retirement plan is in the stock, securities market self-managed investment, good times of pension income is very large, but the stock market decline, especially near retirement age did not have enough time to wait for the return, this time the accumulation of a lifetime of water drift even with the loss of the benefits. Retirement annuities as a safe and conservative investment, there are insurance companies committed to the policyholder can live to old to get old, is as long as the life will never stop the sustainable pension plan, become more and more popular financial products. For example,
There are many types of annuity products in the United States, and the classification by the time of withdrawal includes annuity (immediate) and deferred annuity. According to the return on investment, including fixed annuity, variable annuity (variable annuity), different classification names but similar characteristics, are used to provide protection for retirement pension.
That is, the annuity (immediate annuity) as the name implies, the policyholder buys the annuity immediately after the start of the annuity. This type of annuity is suitable for near retirement age, immediately after the purchase of an annuity, an annual or monthly pension, all the way to death. For example, a 70-year-old who buys a $200,000 annuity pays the old man $12,000 a year until he dies, based on interest rates and the old man's life expectancy. The old man was in good health at the age of 85, and his annuity totaled more than $200,000. If an elderly person lives to 90, the insurance company will have to put up $670,000 to provide a pension for the elderly. If an old person dies two years after buying an annuity and there is $176,000 left in the principal amount of the annuity, the old person's annuity beneficiary can continue to receive it on schedule or withdraw it in one lump sum.
Deferred annuity (deferred annuity) also as the name implies, the extension of annuity is the policyholder to buy an annuity is not immediately withdraw the pension but choose to invest in the investment savings strategy provided by the insurance company, after a few years and then began to receive a pension. For example, a 55-year-old investor who transferred $100,000 from his 401K retirement account to buy an annuity, and 10 years later, the total lifetime income account of the annuity guaranteed to grow to 192,000, starting the perpetual pension withdrawal model at age 65, and receiving $9,581 a year until old age. By the age of 76, he received $105,391, more than $100,000 of the initial principal, $191,620 by the age of 85 and $239,525 at age 90.
Variable Annuity
Variable annuity is an investment annuity with high returns and high risk. Most of these products will give investors a variety of mutual fund investment options, the policyholder self-management and risk-taking.
Fixed annuity (Fixed annuity)
Fixed annuities are like time deposits in banks, insurance companies guarantee a fixed interest return on annuity account deposits with policyholders, usually higher interest than bank term deposit interest, compound interest growth and annuity interest income in the current year do not pay personal income tax, only after the beginning of the annuity to pay personal income tax according to income. Fixed annuities are a very safe and low-risk investment. The only drawback is that the rate of return is not high enough and long-term is not enough to hedge against the risk of currency devaluation brought about by inflation.
Fixed Annuity, an index annuity introduced in recent years, is a perfect solution to this problem and is becoming the most popular type of annuity product. The introduction of such annuities to the U.S. market in 1995 began to come under real attention in 2008 because of the stock market crash in the financial markets of the 2008 subprime crisis, and the index annuity allowed policyholders to at least ensure that the principal of the investment and the dividends earned were protected from damage. In 2010, the U.S. financial markets invested $32.1 billion in index annuities, an increase of 7% over 2009, and reached $60.9 billion in index annuities for a nine-year period in 2016.
The popularity of index annuities can be understood as a mixture of fixed and variable annuities, which combinethe the advantages of both annuities and avoid the shortcomings of the two types of annuities mentioned above. Index annuities that can participate in the securities market to obtain higher returns, but can be done to protect the bottom lock profit will not be put down by the stock market high risk, both considerable returns and will not lose money, belong to the conservative low-risk investment, which needs a conservative strategy of retirement planning can not be more suitable. The next article will introduce you to several FIAs recommended by professional insurance analysts after evaluation and comparison.
The last article introduced the benefits of retirement annuities is the security of the principal, the current most popular index retirement annuity can be the bottom lock profit, that is, can participate in the growth of financial markets to provide safe and stable returns, effectively avoid the risk of currency depreciation caused by inflation, but also can provide policyholders to live to old and old sustainable retirement income. And the applicant does not need a medical examination, the procedure is simple. The best way to buy an annuity product is to use money from a retirement account such as an IRA or 401K or a credit to an Qualified annuity account. Investors who are particularly close to retirement age face unpredictable investment risks if they do not want to keep their retirement account money floating on the stock fund securities market, and some or all of them are the most secure retirement planning strategies.
Here's an index retirement annuity product from Allianz, the insurance company that sells the number one FIA annuity in the United States.
Two bonus
Any principal invested in an annuity account in the first year will receive an additional 22% bonus. That is, if the policyholder buys an annuity of 200,000, he can immediately receive an additional 44,000 bonuses to the PIV account, which is the account that calculates the income from perpetual retirement income, immediately changes from 200,000 principal to 244,000.
The PIV account calculates return on investment and interest based on the changes in the stock index selected by the policyholder, with the insurance company committing 50% additional interest Credit Bonus, which is for life.
For example, if the annual return is calculated at 4% based on the stock market index reference, the insurance company will automatically add 50% bonus interest, and the actual return interest for the current year is 4% plus 2% . The principal amount of the First Year of the PIV account increased from 200,000 invested to 200,000 plus 40,000 plus 240,000 x 6% . . . $ 254,400.
Two special income
Living to the old to get old life income, insurance companies according to the policyholder began to withdraw life-long income age accounting for different proportions of income payment, the following data are the current. Insurers guarantee that even if the insured's principal is exhausted, as long as the policyholder is still alive, the insurance company guarantees that it can continue to pay lifetime income until the end of the year.
What's more, the usual annuity product sits on the return on investment when it starts to withdraw its pension, and Allianz's fund ingress not only starts receiving lifetime income and still has the principal to grow according to the annual selected index, but still has an additional 50% bonus interest. The key is that the pension you receive each year is also interest on the same amount as your annuity account balance, and the compound interest increases, with the extra increase in interest added to the amount received in the next year. For example, the first year from the annuity to receive $10000, this year's annuity account based on the stock market index interest plus an additional 50% interest is 6%, the $10000 to earn $600, the next year can receive $10,600, if the next year continues to grow by 6%, the third year can receive $10600 x 6% of the $11236. Because the index annuity guarantees the bottom lock profit, so the lifetime perpetual income is 100% guarantee disain-flat, the principal will never lose.
An insurance company will provide twice as much annuity income as an annuity holder in the event of a required long-term care need one year after the annuity account becomes effective. For example, the previous annual lifetime income was $10,000, and with a qualified long-term care need, you can receive $20,000 a year from your insurance company until you no longer need long-term care. This additional income clause for long-term care is different in each state, and please consult your broker to confirm that this provision is attached in your state.
Death compensation two methods of taking
If the insured person's principal has not been taken before death, the insurance company stipulates that the policyholder's selected annuity beneficiary may receive the remaining principal plus the total index return at a one-time amount.
The second method is that if the beneficiary can withdraw the deceased compensation in five years, the insurance company can pay the beneficiary for 5 years according to the Total Amount of the PIV balance, i.e. all bonus and index income, etc.
Finally, another big advantage of this annuity product is that there are no sales or upfront costs, and no additional perpetual income with en contract charges. The only requirement for this product is that it cannot be used for the first 10 years and there will be a fine if extracted. Annuities are originally used for retirement planning, ordinary retirement plans such as 401K and IRA is in accordance with the IRS IRS regulations 59-and-a-half years is not available, if the use of the IRS will give a 10% fine, so the 10-year lock-up period sounds like a long-term investment in retirement planning money, this is also very reasonable and not difficult to do.
