Guide to Annuities.
Understand
your options.
This guide to annuities starts with a practical question: what job would an annuity need to do in your retirement plan? Roberts Wealth Management helps you consider income needs, access to savings, risk, and contract details together—so you can ask better questions before making a decision.
Your priorities.
Define the role in your plan.
Compare the actual contract.
Understand the costs and limits.
A guide to annuities,
starting with your goals.
An annuity is a contract with an insurance company. Depending on its terms, it can accumulate value, provide income payments, or combine features for different stages of retirement.
The label alone does not tell you whether it fits. Two contracts can differ in their guarantees, costs, withdrawal rules, and benefits for a surviving spouse or other beneficiaries.
Understand the
main annuity types.
Income timing and the way value is credited are separate features. Use these categories as a starting point, then review the specific contract.
Immediate & deferred income annuities
Income annuities exchange a premium for payments under a selected payout arrangement. Payments may begin soon or at a future date, and may last for life or a specified period.
Fixed annuities & MYGAs
Fixed annuities credit interest under the contract’s terms. A multi-year guaranteed annuity, or MYGA, guarantees a stated rate for an initial period. Renewal terms may differ.
Fixed indexed annuities
Interest is calculated using a formula linked to an index. You do not directly own the index. Crediting limits can reduce participation in gains; charges and withdrawals can still reduce value.
Variable annuities
Value depends on investment options you select and can rise or fall. These contracts involve investment risk, including possible loss of principal, along with insurance features and costs.
A note about other indexed products
Registered index-linked annuities, sometimes called RILAs or buffered annuities, differ from fixed indexed annuities and can expose you to market losses. Always confirm the actual product type.
The terms that
shape the tradeoff.
A guide to annuities is most useful when it helps you understand what to ask about the contract in front of you.
Surrender charges
Taking money out during a surrender period may trigger a charge. Ask about permitted withdrawals, exceptions, and any market value adjustment.
Caps, spreads & participation
A cap limits credited gains, a participation rate uses a portion of an index gain, and a spread subtracts from a calculated gain. Contracts may combine these features.
Optional riders
A rider adds contract features and may add cost. A figure used to calculate income benefits is not necessarily the cash value available to withdraw.
Fees & compensation
Ask about explicit fees, limits built into crediting formulas, rider charges, and how the person recommending the contract is compensated.
Account & withdrawal rules
Tax treatment depends on how the annuity is funded and used. Discuss withdrawals and potential penalties with your tax professional, including when using retirement account funds.
The insurer’s promise
Guarantees depend on the issuing insurer’s financial strength and claims-paying ability. Understand which values are guaranteed and the conditions that apply.
Start with your plan.
Then evaluate the product.
The conversation should explain both the purpose of a recommendation and the alternatives to consider.
- 01
Define
Identify the income need or other goal you are trying to address.
Give the decision a purpose.
- 02
Review
Consider your timeline, risk tolerance, savings, and need for accessible money.
Look at the whole household.
- 03
Compare
Review contract features, costs, restrictions, and other ways to address the same goal.
Make the tradeoffs clear.
- 04
Confirm
Resolve questions and review the actual documents before making a commitment.
Understand what you are choosing.
Bring your questions.
Keep your priorities in view.
You do not need to arrive with a product in mind. Start with the income you expect, the expenses you want to cover, and the savings you need to keep accessible.
If you already own an annuity, bring a current statement and contract information. Review any replacement carefully before making a change.
Understand before
you commit.
Are all annuities the same?
No. They differ in how value accumulates, how income is paid, the risks involved, and the guarantees provided. Start by identifying the product type and reviewing the actual contract.
Can I lose money in an annuity?
It depends on the design and the transaction. Variable and registered index-linked annuities can involve market losses. Even when a contract protects against index declines, fees, surrender charges, withdrawals, or adjustments may reduce the amount you receive.
Can an annuity provide income for life?
Certain payout arrangements and optional benefits provide lifetime income under specified conditions. Ask whether payments cover one or two lives, what happens at death, and how withdrawals or other actions could change the benefit.
Is an income benefit base the same as cash value?
Not necessarily. A benefit base may be a bookkeeping figure used to calculate income under a rider. It may not be an amount you can withdraw as a lump sum. Ask to see both the available cash value and the income calculation.
Does an annuity add tax deferral inside an IRA?
An IRA already provides tax advantages, so an annuity inside it does not add another layer of tax deferral. Evaluate any insurance or income features on their own merits and review the decision with your financial and tax professionals.
Should I replace an annuity I already own?
Compare the existing contract with any proposed replacement. Consider surrender charges, a new surrender period, benefits you could lose, new costs, and tax consequences. A newer contract is not automatically a better fit.
Are annuities right for everyone?
No. Suitability depends on your circumstances, goals, time horizon, and need for liquidity. This guide is a starting point for questions, not a recommendation to buy an annuity.
Continue your
retirement planning.
Consider an annuity in the context of the other decisions that shape your retirement.
Connect the moving pieces.
Consider income, investments, and personal priorities in one planning conversation.
Understand where insurance fits.
Review protection needs alongside household goals and available resources.
Coordinate income decisions.
Explore Social Security timing as part of your retirement picture.
Let’s talk about
what fits your retirement.
Bring your annuity questions to Roberts Wealth Management.
General educational information, not an individual product recommendation or tax advice. Annuities are long-term insurance contracts with terms, costs, restrictions, and risks that vary by product. Guarantees depend on the issuing insurer’s financial strength and claims-paying ability. Variable and registered index-linked annuities involve investment risk, including possible loss of principal. Review the contract, applicable prospectus, and qualified tax guidance before acting.
