Fixed annuities offer savers a chance to earn interest higher than CDs and other bank products.
They also provide principal protection from market volatility, which is especially important for investors close to or in retirement.
While fixed annuities have some advantages, they also have drawbacks.
One of the most significant drawbacks is that they typically have surrender charges if you need to access your money before the maturity date.
For this reason, fixed annuities are best suited for investors with a time horizon of 2 to 5 years who are not likely to need access to their money during the fixed term of 2 to 5 years.
Keep in mind many insurance companies will let you receive your earned interest monthly or take as much as a 10% withdrawal from your funds annually.
Fixed annuities can be a good choice for investors looking for a low-risk way to grow their nest egg and don’t mind investing their money for the long haul.
A fixed annuity is best for people 55 years or older because you must wait until age 59.5 to withdraw any money from the annuity without penalty.
Insurance companies want a minimum deposit of $20,000 and a maximum deposit of $1,000,000.
But if you’re a saver here is the best reason why you want to invest in Fixed annuities right now. Besides the high rates insurance companies are paying today. With a fixed annuity all money grows taxed deferred until income is withdrawn. You receive three levels of compounding interest.
First, interest on your principal. Second, interest on interest, as long as the interest earned on the principal is not withdrawn, it will earn additional interest know as compound interest. Third, interest on taxes saved.
Another benefit of fixed annuities, you can either use qualified money such as an IRA or 401-K or non-qualified money such as bank savings or investment accounts.
SO LET’S START SAVING:
Rates for March 2023
(Rates Subject To Change on All Products)