How To Buy An Annuity

Shawn Plummer, CRPC

Chartered Retirement Planning Counselor

Understanding Annuities And Their Benefits

Determine Your Financial Goals

When considering an annuity, the first step is identifying your financial goals. Are you looking for a steady income stream during retirement or want to grow your investments with tax-deferred benefits? Understanding your objectives will help you choose the right type of annuity.

Research Different Types Of Annuities

Annuities come in various forms, each suited to different needs:

  • Immediate Annuities: Start payments immediately after a lump sum payment, ideal for those seeking immediate income.
  • Deferred Annuities: Offer future income with tax-deferred growth, perfect for long-term financial planning.
  • Fixed Annuities: Provide fixed interest and guaranteed income, ensuring stability and predictability.
  • Variable Annuities: Linked to investment performance, offering potential for higher returns but with associated risks.
  • Indexed Annuities: Earnings based on a stock market index, offering the potential for better returns with no risk of loss.

The Cost Of Annuities

The cost of annuities varies depending on the type and provider. Typically, the minimum investment starts at $5,000, and the maximum can go up to $1,000,000 without pre-approval. Additionally, fees may be associated with the annuity, including administrative fees, mortality, expense risk charges, and investment management fees. Understanding all costs involved is important in making an informed decision.

Choose A Reputable Provider

Selecting a provider with a solid reputation and strong financial ratings is crucial. This ensures that your investment is secure and that the company can fulfill its payment obligations. The Annuity Expert is the best place to buy an annuity because we have the largest selection of annuities in the United States, offering a wide range of options to suit your specific needs.

Consult A Financial Advisor

Professional advice is invaluable when purchasing an annuity. A financial advisor can help you understand the nuances of different products, ensuring that you make an informed decision that aligns with your financial goals.

Compare Offers And Read The Fine Print

Review multiple annuity contracts, paying close attention to fees, terms, and conditions. Understanding all aspects of the contract will help you avoid any unpleasant surprises down the road.

The Ultimate Guide To Shopping And Buying An Annuity

How We Can Help

At The Annuity Expert, we understand that securing your financial future can be overwhelming. With 15 years of experience as an insurance agency, annuity broker, and retirement planner, we are dedicated to finding the best solutions at the lowest costs for our clients.

Understanding Your Needs

We recognize that planning for retirement or securing a steady income stream involves significant emotional and financial considerations. You might be feeling uncertain about the future, worried about outliving your savings, or unsure about the best investment options. These concerns can cause stress and anxiety, impacting your overall well-being.

Our Commitment

We are committed to providing personalized advice tailored to your unique needs and preferences. Our goal is to make you feel valued and special, ensuring that your financial planning experience is both positive and reassuring. We fight for transparency, low costs, and finding the best possible solutions for you.

How To Invest In Annuities.

What We Recommend

Step 1: Initial Consultation

  • What Happens: We begin with a comprehensive consultation to understand your financial goals, risk tolerance, and retirement plans.
  • Main Benefit: This personalized approach ensures that we recommend annuity products that align perfectly with your needs.

Step 2: Product Comparison and Selection

  • What Happens: Our experts compare various annuity options from top providers, highlighting their features, benefits, and costs.
  • Main Benefit: You receive a clear, unbiased comparison, enabling you to make an informed decision.

Step 3: Purchase and Ongoing Support

  • What Happens: Once you select an annuity, we guide you through the purchase process and provide continuous support.
  • Main Benefit: You benefit from our expertise, ensuring a smooth transaction and ongoing peace of mind.

Features and Benefits

  • Expert Advice: Personalized financial planning and advice tailored to your unique situation.
  • Comprehensive Comparisons: Detailed comparisons of different annuity products to find the best fit for you.
  • Ongoing Support: Continuous guidance and support throughout the life of your annuity.

Addressing Common Objections

  • “Annuities are too complicated.” We simplify the process, clearly breaking down each step and explaining all the details.
  • “Fees are too high.” We focus on finding low-cost options without sacrificing quality or security.
  • “I’m not sure I can trust the provider.” We only work with reputable, financially strong companies.

Failing to secure expert advice can lead to poor investment choices, higher fees, and potentially inadequate income during retirement. Conversely, partnering with The Annuity Expert ensures that you are well informed, supported, and confident in your financial future.

Contact us today for free advice or a quote and take the first step towards securing your financial future.

Annuity Companies To Avoid And The Do'S And Don'Ts Of Shopping And Buying Annuities.

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Questions From Our Readers

How do I purchase an annuity?

You can purchase an annuity through a financial institution, such as a bank, insurance company, or brokerage firm (like The Annuity Expert).

Is it a good idea to buy an annuity at age 40?

Buying an annuity at age 40 can be a strategic move for retirement planning. The forecasting allows you to invest money now in return for a guaranteed income stream in the future, providing clarity on your retirement income. With the power of compounding, your money has more time to grow, which can translate into higher income during retirement.

Do you have to buy an annuity in full when purchasing?

No, you don’t necessarily have to buy an annuity in full when purchasing. There are two common ways to fund an annuity: a lump sum payment or periodic payments over time. A lump sum payment means paying the entire amount upfront, while periodic payments involve making contributions at regular intervals until the annuity begins to pay out.

How do I buy a pension annuity?

To purchase a pension annuity, start by identifying your financial needs and goals for your retirement. Understanding the different types of annuities and their unique benefits is integral to this process. It is advisable to consult a financial advisor who can help you choose the right annuity based on your circumstances. Once you’ve decided, select a reliable annuity provider, considering their financial strength and reputation. Finally, you must submit an application with your chosen provider, specify the annuity terms, and make the required payments.

How does an annuity work as a buyer?

As a buyer, when you purchase an annuity, you make an upfront payment or series of payments to the insurance company. In return, the company agrees to make future payments to you immediately or starting at a certain point. These payments may last a specific number of years or for the rest of your life, depending on the annuity contract.

How long does it take to buy an annuity?

Buying an annuity can take anywhere from a few days to several weeks. This timeline depends on factors such as the complexity of the annuity product, the responsiveness of the insurance company, and the time it takes for you to complete any required paperwork or medical exams. The insurance company will issue the annuity contract after the application is submitted and approved and the payment is made.

How do you buy an annuity for a lump sum payout?

To acquire an annuity allowing a lump sum payout, you must invest in a deferred annuity, such as a fixed, fixed indexed, or variable one. Once the contract period concludes, you can withdraw or transfer the entire account balance as a lump sum.

How to buy an annuity with cash?

Yes, you can buy an annuity with cash.

How to buy a qualified annuity?

You often use pre-tax dollars through a retirement plan like a 401k or IRA to buy a qualified annuity. Start by identifying your retirement needs and goals. Then, explore the different types of annuities and choose the one that best suits you. Select a reliable annuity provider, complete the application, and fund the annuity using money from your retirement account via a transfer form.

How do you tell if an annuity is good for the buyer?

Assess your financial goals and retirement needs to determine if an annuity is good for you. Consider factors like the annuity’s fees, surrender charges, the insurer’s financial strength, and the annuity’s potential for income growth. Compare these factors with other investment options. Additionally, consider your risk tolerance and the annuity’s payout options.

What portion of your savings is used to buy an annuity?

The portion of your savings to put into an annuity depends on your financial goals, risk tolerance, and other retirement income sources. A standard guideline is to invest enough to cover your necessary expenses in retirement not covered by Social Security and pensions.

Is buying an annuity at 30 a good idea?

Purchasing a fixed indexed annuity at age 30 can be a smart strategy for the safer portion of an investment portfolio. This type of annuity offers a unique blend of potential for growth linked to a market index and protection from market downturns, serving as an alternative to bonds. The earlier purchase allows for a longer accumulation phase, which can lead to a higher income during retirement.

Can I buy an annuity with my 401k?

Yes, you can buy an annuity with your 401k funds. This is typically done by rolling over the funds from your 401k into an individual retirement account (IRA) annuity without incurring taxes. This strategy can provide a steady stream of income in retirement.

Which annuities are safe to buy online?

The safest annuity to buy online is a fixed, fixed index, immediate, or long-term care annuity.

Which annuities are better bought with an agent, face to face?

Consult a financial advisor before buying variable annuities. These products are complicated, involve investing risks, and can have high fees.

Should I buy an annuity from a poor-rated insurance company

The short answer is “no”; you shouldn’t buy an annuity from an insurance company that is not A- rated or better. There are too many great options available from highly rated annuity companies.

Can anyone buy an annuity?

Anyone can purchase annuities, including those who receive social security payments. However, annuities are especially suitable for retiring people who want a guaranteed income stream to supplement their retirement savings. They are also suitable for individuals who want to ensure their beneficiaries receive a steady income after death.

Can you buy an annuity directly from the insurance company?

Yes, you can buy annuities directly from insurance companies without going through an intermediary. The type of annuity that can be purchased directly is one you want to get a second opinion on. However, consulting a financial advisor, like The Annuity Expert, can help ensure the product fits your financial needs and goals.

What is the primary reason for buying an annuity?

Annuities provide a steady, reliable income that lasts as long as you live. It’s a safeguard against the risk of outliving your savings, a genuine concern in an era where life expectancies are continually increasing.

What annuities have hidden fees?

Sometimes, there are hidden fees when purchasing an annuity. Variable annuities can include surrender charges, administrative fees, mortality and expense risk charges, management fees, and other miscellaneous costs that may not be immediately obvious. These fees can vary significantly depending on the annuity product chosen.

What’s the average age of a typical annuity buyer?

The typical annuity buyer falls within the age range of 45 to 75 years old.

Who purchases the most annuities?

Most people who buy annuities do so with retirement income stability in mind. According to a 2020 report by the Insurance Information Institute, about 34% of all U.S. households owned annuities.

What is the best age to buy an annuity?

While there is no universal rule for when to purchase an annuity, it is most common among individuals in their fifties to seventies. Younger buyers in their thirties and forties typically seek secure growth for their savings, those in their fifties and sixties often aim to bolster their pre-retirement savings or secure a guaranteed lifelong income, and purchasers in their seventies usually focus on securing income, planning their estate, or preparing for long-term care needs.

At what age can you start getting your annuity?

Depending on the type of annuity and its terms, you can start receiving annuity payments at any age you choose. Some start as early as 55, while others may be designed to start later, like at age 65 or 70.

Can I start collecting payment on annuity if I buy when I’m 67?

Yes, if it’s an immediate annuity or as specified in the contract.

At what age do you stop being able to contribute to an annuity?

There’s no age limit for contributions, but some products may have restrictions.

What age should I tell my child about my annuity?

When they’re old enough to understand financial planning, possibly in their teens.

Who is eligible for an annuity?

Anyone can buy an annuity; payout eligibility depends on the contract terms.

How long does it take to set up an annuity?

Typically, it takes a few weeks up to a month, depending on the provider and annuity type.

How much do banks look for in your account before you can buy an immediate annuity?

Most annuity providers want to see at least $85,000 in total liquid assets before purchasing an annuity.

How soon after buying annuity payments start?

Immediate annuities start within a year, often within a month.

How do you buy an annuity that you pay for once a month?

Set up a monthly payment option on the payment form when you’re ready to start receiving payments.

If I buy an annuity now, when can I receive my first check?

Typically, 30 days.

What is the smallest dollar amount of an annuity?

Some annuities can be purchased with a few thousand dollars.

What type of annuity should you get if you want to receive payments in a month?

An immediate annuity or a deferred annuity with a lifetime income rider is suitable for payments to start within a month.

How do I fund an annuity?

Fund an annuity with a lump sum or through regular contributions, often from personal savings, IRA rollovers, 401k funds, or other investment proceeds to make contributions.

How do you use annuities to create your own pension?

You can create your own pension by investing in a lifetime income annuity to provide a steady, predictable income stream, similar to a traditional pension.

Can I preview an annuity contract before I buy it?

Yes, you can preview an annuity contract before purchasing it, often through a document known as a prospectus. An annuity prospectus provides detailed information about the annuity, including its features, fees, potential returns, and other important terms and conditions. It’s designed to help you understand the product fully before committing. Reviewing the prospectus carefully can help you make an informed decision about whether the annuity suits your financial goals and needs.

I’m considering buying an annuity, but I want to start receiving payments before 59. Is this possible?

Yes, you can start receiving annuity payments before age 59, but be aware of potential early withdrawal penalties on any tax-deferred growth in your annuity until you reach 59½. A viable strategy could be purchasing a fixed-indexed annuity with a Guaranteed Lifetime Withdrawal Benefit. This option offers asset protection and the payments you desire. You could defer starting the lifetime payments and instead initially take a 72(t) distribution for penalty-free withdrawals. Once you’ve fulfilled the 72(t) requirements, you could then commence the lifetime annuity payments. This approach can provide early income while mitigating penalties.

I purchased an annuity, and I’m receiving payments. Will the insurance company withhold taxes, or will I receive a 1099?

When receiving payments from an annuity, whether the insurance company withholds taxes varies. Some companies will withhold taxes from your payments, while others may not, leaving the tax responsibility to you. Additionally, regardless of tax withholding, you will typically receive a 1099 form from the insurance company. This form reports the amount of income you received from the annuity, which you’ll need for your tax filings.

Can you buy annuities for minor grandchildren?

Yes, you can buy annuities for minor grandchildren. Generally, annuities do not have a minimum age requirement for the beneficiary, allowing you to purchase an annuity for a grandchild, regardless of age.

What are the charges for canceling an annuity within a year of purchase?

The specific charges depend on the annuity contract terms and the state of residence at the time of purchase. Generally, early cancellation fees, often called surrender charges, can range between 10% to 12% in the first year.

Can you buy an annuity at any age?

Yes, you can buy annuities at any age, typically up to age 85.

Can I buy an annuity at 60?

You can buy an annuity at 60. Annuities are available to individuals at various ages and typically offer options for immediate or deferred income to help secure retirement. Always consult a financial advisor to choose the right product for your needs.

Can I buy an annuity at 70?

Yes, you can buy an annuity at 70. Annuity companies typically sell annuities up until age 75.

Can you buy an annuity without a pension?

Yes, you can buy an annuity without a pension.

Shawn Plummer, CRPC

Chartered Retirement Planning Counselor

Shawn Plummer is a Chartered Retirement Planning Counselor, insurance agent, and annuity broker with over 14 years of first-hand experience with annuities and insurance. Since beginning his journey in 2009, he has been pivotal in selling and educating about annuities and insurance products. Still, he has also played an instrumental role in training financial advisors for a prestigious Fortune Global 500 insurance company, Allianz. His insights and expertise have made him a sought-after voice in the industry, leading to features in renowned publications such as Time Magazine, Bloomberg, Entrepreneur, Yahoo! Finance, MSN, SmartAsset, The Simple Dollar, U.S. News and World Report, Women’s Health Magazine, and many more. Shawn’s driving ambition? To simplify retirement planning, he ensures his clients understand their choices and secure the best insurance coverage at unbeatable rates.

The Annuity Expert is an independent online insurance agency servicing consumers across the United States. The goal is to help you take the guesswork out of retirement planning and find the best insurance coverage at the cheapest rates

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