What is an Annuity?

What is an Annuity?

Individuals hold more than $2.0 trillion in annuity contracts; a tidy sum considering an estimated $7.4 trillion is held in all types of IRAs.¹

Annuity contracts are purchased from an insurance company. The insurance company will then make regular payments – either immediately or at some date in the future. These payments can be made monthly, quarterly, annually, or as a single lump-sum. Annuity contract holders can opt to receive payments for the rest of their lives or for a set number of years.

The money invested in an annuity grows tax-deferred. When the money is withdrawn, the amount contributed to the annuity will not be taxed, but earnings will be taxed as regular income. There is no contribution limit for an annuity.

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Where Will Your Retirement Money Come From?

Where Will Your Retirement Money Come From?

For many people, retirement income may come from a variety of sources. Here’s a quick review of the six main sources: Social Security, personal savings and investments, Individual Retirement Accounts, defined-contribution plans, defined-benefit plans, and continued employment. 

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