A Beginner’s Guide to Understanding Annuities
Donald Morgan, AIF?, CPFA?
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?? A Beginner’s Guide to Understanding Annuities
?? Thursday, February 27, 2025, at 10:00 AM PT
?? Host: Donald Morgan, AIF?, CPFA?
?? Guest Speaker: Pat Campion , Regional Vice President, IBD Channel at Prudential
Pat Campion and Prudential are not affiliated with Independent Wealth Connections or LPL Financial.
What’s on the Agenda?
Annuities are often misunderstood, yet they can play a valuable role in retirement planning, tax efficiency, and income strategies. Whether you’re new to annuities or looking for ways to incorporate them into your financial plan, this session will provide a clear breakdown of the different types, benefits, and considerations to help you make informed financial decisions.
?? Highlights from Don’s Q&A with Pat Campion
Don: What exactly is an annuity, and why should people consider one?
Pat: An annuity is a contract with an insurance company that provides guaranteed income, either immediately or in the future. They are commonly used for retirement security, tax-deferred growth, and lifetime income, making them attractive for those looking for long-term financial stability.
Don: What are the different types of annuities?
Pat: There are several types, each with unique benefits:
? Immediate vs. Deferred Annuities – Choose between starting payments now or allowing the value to accumulate for future income.
? Fixed Annuities – Offer a guaranteed rate of return and predictable income.
? Indexed Annuities – Returns are tied to a market index (e.g., S&P 500) while offering downside protection.
? Fixed Indexed
? Variable Annuities – Allow investment in the market, offering growth potential but also exposure to market fluctuations.
Don: How do annuities fit into a retirement plan?
Pat: They offer predictable, guaranteed income, which can supplement Social Security, pensions, or other investments. Many individuals use them to create a personal pension, ensuring they won’t outlive their savings.
Don: Are annuities expensive?
Pat: Costs vary depending on the type of annuity and optional riders (such as long-term care benefits or enhanced income guarantees). Some annuities have low or no fees, while others include costs for additional features. It’s essential to understand the contract terms before investing.
Don: What are the tax benefits of annuities?
Pat: A significant advantage of annuities is tax-deferred growth—meaning you don’t pay taxes on earnings until you withdraw funds. This can help manage taxable income in retirement and optimize wealth accumulation.
Why Attend?
?? Annuities Simplified: A clear, jargon-free breakdown of how annuities work.
?? Retirement Income Planning: Learn how annuities can provide lifetime income security.
?? Tax Advantages: Understand how annuities offer tax-deferred growth potential.
?? Market Protection: Explore options that provide guaranteed returns and downside protection.
?? Event Details
?? When: Thursday, February 27, 2025, at 10:00 AM PT
?? Where: Virtual Webinar
Disclaimer: Investing involves risk, including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
Fixed and Variable annuities are suitable for long-term investing, such as retirement investing. Gains from tax-deferred investments are taxable as ordinary income upon withdrawal. Guarantees are based on the claims paying ability of the issuing company. Withdrawals made prior to age 59 ? are subject to a 10% IRS penalty tax and surrender charges may apply. Variable annuities are subject to market risk and may lose value.?
Fixed Indexed Annuities (FIA) are not suitable for all investors. FIAs permit investors to participate in only a stated percentage of an increase in an index (participation rate) and may impose a maximum annual account value percentage increase. FIAs typically do not allow for participation in dividends accumulated on the securities represented by the index. Annuities are long-term, tax-deferred investment vehicles designed for retirement purposes. Withdrawals prior to 59 ? may result in an IRS penalty, and surrender charges may apply. Guarantees are based on the claims-paying ability of the issuing insurance company.
Riders are additional guarantee options that are available to an annuity or life insurance contract holder. While some riders are part of an existing contract, many others may carry additional fees, charges and restrictions, and the policy holder should review their contract carefully before purchasing. Guarantees are based on the claims paying ability of the issuing insurance company.
Securities offered through LPL Financial, member FINRA/SIPC. Investment advisory services offered through LPL Financial, a registered investment advisor.?