Variable Annuities

Are you looking for a retirement planning solution that can provide an income for life?

Are you worried about running out of money in retirement? Consider investing in variable annuities! A variable annuity is a type of annuity contract, the value of which can vary based on the performance of an underlying portfolio of sub accounts. A variable annuity might be appropriate if you have a higher risk tolerance and are pursuing long-term growth. You also may benefit from tax deferral during that time. While these contracts benefit from any investment gains, they also can lose money when investments lose value.

Variable annuities should be considered long-term investments due to the limitations on withdrawals. Typically, they allow one withdrawal each year during the accumulation phase. However, if you take a withdrawal during the contract’s surrender period, which can be as long as 10 years, you’ll generally have to pay a surrender fee. As with most retirement account options, withdrawals before the age of 59½ will result in a 10% tax penalty.

Variable annuities have the possibility of giving buyers a chance to benefit from rising markets by investing in a menu of mutual funds offered by the insurer. The upside is the possibility of higher returns during the accumulation phase and a larger income during the payout phase. The downside is the buyer is exposed to market risk, which could result in losses. With a fixed annuity, by contrast, the insurance company assumes the risk of delivering whatever return it has promised.

Risks Involved

Variable annuities are a type of investment that can provide you with an income stream in retirement. However, there are some risks associated with these annuities.

The value of your annuity can go up or down depending on the performance of the underlying investments. This means you could end up with less money than you started.
The income payments from a variable annuity could be reduced if the underlying investments perform poorly.
Finally, most variable annuities can have high fees, affecting your investment returns.

Advantages of variable annuities

Tax-deferred growth: With variable annuities, your investment gains can grow tax-deferred, meaning you won’t have to pay taxes on your investment earnings until you start withdrawing money from the annuity.
Investment Options: Provide a range of investment options, typically in the form of subaccounts that are similar to mutual funds. This allows investors to tailor their investment portfolio according to their risk tolerance and financial goals, potentially achieving higher returns compared to traditional fixed annuities.
Market Exposure: Variable annuities offer the opportunity for market exposure, allowing investors to participate in the potential growth of the financial markets. This can be particularly attractive for those who are comfortable with some level of risk and are looking for higher growth potential.
Death benefits: Variable annuities may also offer death benefits, which can provide a payout to your beneficiaries in the event of your death.
Estate planning: Variable annuities can be useful in estate planning as they provide a way to pass on assets to beneficiaries while potentially avoiding the probate process.

With variable annuities, you have the flexibility to choose from a range of investment options, allowing you to create a personalized investment strategy that meets your unique needs and goals. And with the potential for tax-deferred growth, your investment gains can grow faster over time, helping you save more for retirement.

Don’t leave your retirement to chance! Contact us today and take the first step towards the possibilities of planning for a more secure and prosperous future.

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Nortlov Securities LLC is a limited liability company based in Georgia. As a registered broker-dealer and member of the Financial Industry Regulatory Authority, Inc.