If you’re retiring soon and own an annuity, you may be considering converting your retirement investment into a series of periodic payments. Or you may consider finding out more about the options you have to annuitize your 401(k).
Annuitization converts your retirement savings into a guaranteed stream of payments for a fixed period or the rest of your life. *
In most cases, the funds that are being annuitized are invested, whether that's in bonds or stocks. Then the money is used to make a series of periodic payments to you.
But the contract must be annuitized to receive this benefit. When someone is ready to begin receiving their annuity payments, the annuity carrier converts the accumulation units laid out in the contract into annuity units and details the amount to be paid monthly. *
Should You Annuitize?
So the question is if you should take the next step to annuitize your retirement savings.
One reason you might choose annuitization is to receive a monthly payment, not unlike a regular paycheck you might have received during your career.
You may consider how much money you have in other saved assets before deciding whether to annuitize. If you have significant assets saved elsewhere that you can use, annuitization might be a viable option. Consider your life expectancy and longevity when deciding if annuitization is right for you.
There are some downsides to annuitizing your retirement savings. It’s important to know these factors before making a final decision:
When you are planning for retirement, several factors go into deciding whether or not to annuitize your savings. For help deciding whether annuitization is the right option for you and your family, contact the office.
*The guarantee of the annuity is backed by the claims paying ability of the issuing insurance company.
All investing involves risk, including the possible loss of principal. There is no assurance that any investment strategy will be successful.
Before deciding whether to retain assets in a 401(k) or roll over to an IRA, an investor should consider various factors including, but not limited to, investment options, fees and expenses, services, withdrawal penalties, protection from creditors and legal judgments, required minimum distributions and possession of employer stock. Please view the Investor Alerts section of the FINRA website for additional information.
Withdrawals prior to age 59½ may result in a 10% IRS tax penalty, in addition to any ordinary income tax. The guarantee of the annuity is backed by the financial strength of the underlying insurance company. Investment sub-account values will fluctuate with changes in market conditions.
An investment in a variable annuity involves investment risk, including possible loss of principal. Variable annuities are designed for long-term investing. The contract, when redeemed, may be worth more or less than the total amount invested. Variable annuities are subject to insurance-related charges including mortality and expense charges, administrative fees, and the expenses associated with the underlying sub-accounts. Investors should consider the investment objectives, risks and charges and expenses of the variable annuity carefully before investing. The prospectus contains this and other information about the variable annuity. Contact [Registered Representative name] at [Registered Representative address] or [Registered Representative phone number] to obtain a prospectus, which should be read carefully before investing or sending money.
The material is not intended to provide specific legal, tax, or other professional advice. For specific professional assistance, the services of an appropriate professional should be sought.
This material was developed and prepared by a third party for use by your Registered Representative. The opinions expressed and material provided are for general information and should not be considered a solicitation for the purchase or sale of any security. The content is developed from sources believed to be providing accurate information.