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Company Name:


Evergreen Retirement Planning Inc



Address:


Charlotte, NC


Phone:


(704) 999-0105



Fax:


(704) 844-9243



License Number:


7615443



Insurance Brokers:


Janet Taranto



Retirement & Fixed Income Annuity in Charlotte

Overview

Fixed annuities are interest-based vehicles similar to bank-issued CDs, but geared specifically towards retirement savings. Typically, a lump-sum of cash locks in an interest rate ranging from 3% to 10% for a period of 3 to 15 years. The initial deposit — otherwise called the premium — can range from $5,000 to $1,000,000.

Fixed annuities are very low risk, have more liquidity than CDs, are tax-deferred, and typically offer higher yields than bonds, CDs, treasuries, or money market accounts.

A fixed annuity uses one of two distribution models: immediate or deferred. Immediate fixed annuities start issuing monthly payments right away, until the initial premium plus interest gets paid out. Deferred annuities don't pay out until the end of their term, compounding interest like a typical retirement savings account.

Most fixed annuities also feature a lifetime income option — allowing you to convert accumulated savings into a guaranteed monthly income for the rest of your life. This feature is highly desirable to many retirees and sets annuities apart from other types of retirement investments.

Fixed Annuity Features

Fixed annuities vary, but generally feature:

  • Single Premium — One up-front payment and that's it. Future investments require purchase of a new annuity.
  • Guaranteed Rate — Contract locks in a fixed interest rate for x number of years, like a CD.
  • Very Low Risk — Money can only be lost if the insurance company becomes insolvent and your investment exceeds Annuity State Guaranty Limits.
  • Retirement Income — Ideal source of secure monthly retirement checks. Retire with peace of mind and steady growth.
  • 3%-10% Return — Solid returns for essentially no-risk investment. Better than CDs, especially at longer terms.
  • Lifetime Income — An optional lifetime provision guarantees paychecks for life. No worries about outliving your retirement savings.
  • 1-10 Year Term — Fixed annuities are available for short, medium, or long terms. Longer terms yield higher rates.
  • Hassle Free — No micromanagement. Sign the contract, pay the premium, receive paychecks for life.
  • Life Insurance — An optional life insurance provision offers death benefits to loved ones. Save money by foregoing a separate life policy.
  • Unlimited Contributions — Invest as much as you want, buy as many annuities as you like. Unlike a 401(k) or IRA.
  • Inheritance — Bequeath money to loved ones probate-free. Avoid estate/death taxes.
  • Inflation Hedge — Beat inflation and then some. CDs and money market accounts barely cover CPI.
  • Tax-Free Gifts — Gift up to $10,000 per individual, per year, tax-free. Gift money to an unlimited number of individuals.

Fixed Annuity Performance

You can expect solid, guaranteed growth from an investment in a fixed annuity as long as you don't terminate prematurely. In the case of deferred fixed annuities, tax-deferral is going to add up and compound, earning substantially more than a CD, money market account, or even a mutual fund.

Want to see some real numbers? In this next section we compare a typical fixed annuity, CD, and money market account.

Types of Fixed Annuity

Fixed annuities come in three flavors: fixed immediate, fixed deferred, and CD type.

Immediate and deferred specify how payments are made, either in monthly installments or after a specified period of time (typically at the end of the contract term). CD type annuities are CD/annuity hybrids. They function just like regular fixed annuities except for the scope of their guaranteed rate.

Finding the Best Fixed Annuity

The key to buying a high-yield fixed annuity is shopping at a time when interest rates are high. Moreover, if you can handle a longer term (10+ years), you can get a much better rate. Of course, high-yield isn't always what's best. The best annuity is one that's right for your financial position, and in this case the key might be finding balance between a high rate and flexible terms. There's always a trade-off: the longer the commitment, the less flexibility, the higher the rate.

Fixed Annuity Disadvantages

Fixed annuities have many retirement savings benefits, but do you know their disadvantages? There's no such thing as a perfect investment, and annuities are no exception to the rule.

Fixed Annuity Pitfalls

No investment is right for everyone and annuity contracts are naunced. Fixed annuities are sound investments but as with any sale, you can get swindled. You'll want to watch out for overly strict withdrawal schedules, hidden fees, and limited "guaranteed" rates.

Fixed Annuity Alternatives

A healthy retirement plan includes more than one investment vehicle. After all, diversification is the #1 rule of investing. Discover other types of investments that are more or less suitable for retirement savings. Explore CDs, mutual funds, bonds, treasuries, money market accounts, 401(k)s, and more. Compare fixed annuity features to those offered by variable and indexed annuities.

Who Should Buy a Fixed Annuity?

Fixed annuities are ideal for retirees or those wary of market volatility. Although potential for windfalls is limited compared to variable annuities, the fixed annuity's guaranteed rate-of-return beats many other investment vehicles. Fixed rate annuities are well suited for conservative of investors or retirees who need steady monthly income.

Fixed Annuity Performance

What to Expect

Fixed annuities commonly offer interest rates of 4-10%. The insurance provider and the contract's term will determine the actual rate. Longer terms of 5-10 years offer rates upwards of 8-10% — these are the real money-makers. Even though a 2-5 year annuity is still preferable to CD, a 10 year annuity has unmatched growth once tax-deferral kicks in.

Fixed Annuity vs CD vs Money Market

Fixed Annuity vs CD vs Money Market

Here we see the big-picture: the performance of a fixed annuity, CD, and money market account over 20 years. The assumed initial investment is $100,000, with a 33% tax bracket. The CD fares well until the 10 year mark, but then it starts to lag significantly. At 3%, the money market can't keep up at all.

Notice the annuity/CD difference after 20 years: $60,000! Clearly tax-deferral pays off.

Fixed Annuity Outpacing CD

Fixed Annuity Outpacing CD

This graph shows how much more a fixed annuity earns than an equivalent rate CD. Even after the second year it starts to outperform the CD, but as this graph shows, tax-deferral becomes more and more meaningful with time. And, for every point above 8%, savings increase exponentially.

Pocketing the Difference

Pocketing the Difference

Zooming in on years 6 through 10, we can see exactly how much this hypothetical investor saved by choosing a fixed annuity over a CD. In this case, the annuity investor is $9,000 richer after 10 years. After 20 years, he'd be $60,000 richer.

There are 3 general types of annuities: fixed, indexed, and variable. Use this guide to determine which is right for you:

General Annuity Benefits

  • Safety: Backed by A+ insurers
  • Tax Deferral: Tax-free growth
  • High Yield: Better interest rates than CDs
  • Life Insurance: Death benefits
  • Liquidity: Flexible withdrawals
  • Unlimited Contributions: Unlike 401(k)
  • Inheritance: Pass on money probate-free
  • Lifetime Option: Income you can't outlive

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Fixed Annuity

Index Annuity

Variable Annuity

  • Lump-sum Buy-in
  • Invest in Bonds
  • No Risk
  • Guaranteed Rate
  • Moderate Growth
  • 3%-10% Returns
  • 1-10 Year Term
  • Hassle Free
  • Retirement Income
  • Lump-sum or Multi
  • Invest in S&P 500, Nasdaq, S&P 400 Gold Indices
  • Low Risk
  • Minimum Rate
  • Solid Growth
  • Returns Vary
  • 1-18 Year Term
  • Hassle Free
  • Wealth
  • Lump-sum or Multi
  • Invest in Equities
  • Flexible Risk
  • Variable Rate
  • Strong Growth
  • Returns Vary
  • 1-10 Year Term
  • Investment Control
  • Wealth

The Difference Between a CD-Type and Fixed Annuity

The key distinction between a CD-type and fixed annuity is the term of the guaranteed rate. A CD-type annuity's rate is guaranteed for the full contract term. Fixed annuities, although offering the same guaranteed rate, only guarantee it for part of the term.

Example: An 8 year, 6% fixed annuity might guarantee this rate for only the first 5 years. An 8 year, 6% CD-type annuity guarantees its rate for the full 8 years.

Difference Between a CD-Type Annuity and CDs

The CD-type annuity offers many of the same features as a typical CD. Difference number one is that CDs are issued by banks/brokers while CD-type annuities are issued by insurance companies. This means that CDs are insured by the FDIC up to $100,000 for non-retirement accounts. Annuities are not FDIC insured, but are safeguarded by individual state reserves. Annuity coverage varies state-to-state, ranging from $100,000 to $300,000.

A second difference is that CD-type annuities can be rolled over without triggering a tax-event. Using what's known as a 1035 exchange, the CD-type annuity owner can transfer money from one annuity to another without showing an income. This is not possible with CDs, which generate income statements every year.

A third difference is that you can make partial withdrawals from a CD-type annuity. Unlike a CD, a typical CD-type annuity will allow you to withdrawal up to 10% of the initial investment annually. This feature is very desirable because it covers unexpected withdrawal needs. In contrast, liquidating even part of a CD requires you to cash out the whole thing and pay a sizable surrender charge.

Other features of CD-type annuities include the ability to withdraw interest as monthly income and the 10% IRS tax penalty. The first is a positive, the second is a negative. Remember that all annuities are subject to a 10% tax penalty when liquidated prior to the age of 59.5.

Annuities for when you live too long.

The stock market can create havoc on your retirement savings, especially as you get closer to retirement age and don’t have the time to recoup your losses. A 25% drop in stocks means you need to double your investment to 50% just to get back to the original amount. New patents on equity indexed annuities offer features like an upfront bonus, 6.5% compounding riders that guarantee you a lifetime payout, and assisted living riders that double your payout should you need it.* Family endowment riders give a death benefit to your loved ones. Annuities are tax deferred so you are earning interest on your interest allowing your pot of money to grow faster. * 6 month wait required after holding annuity one year.

Example: A 60 year old investing 200K starting payouts in 5 years would receive $14,523.00 a year for life. Defer that to 7 years and it increases to $16.472.00, 10 years, $21,887.00.

Stretch IRA’s can help your family leave inheritance amounts to your children and grandchildren.

Annuities are insured in NC to $300,000. For other states, see chart below.

Life insurance and annuities are protected against carrier insolvency by State Guaranty Associations. Annuities are not FDIC insured, but each insurance company is licensed and regulated in states in which it conducts business. Each state covers policies up to a certain amount should the company go bankrupt. For more information, see NOLHGA — the National Organization of Life & Health Guaranty Associations.

Find your state's protection limit below. Links are provided to each state's Department of Insurance along with a phone number to the state's Guaranty Association.


State (w/link to website):

Protection Limit:

Guaranty Ass. Phone:

Alabama

$100,000

(334) 269-3550

Alaska

$100,000

(907) 465-2515

Arizona

$100,000

(602) 912-8400

Arkansas

$300,000

(501) 371-2600

California

$80,000

(916) 492-3500

Colorado

$100,000

(303) 894-7499

Connecticut

$100,000

(860) 297-3802

Delaware

$100,000

(302) 739-4251

District of Columbia

$300,000

(202) 727-8000

Florida

$100,000 - $300,000

(850) 922-3101

Georgia

$100,000

(404) 656-2056

Hawaii

$100,000

(808) 586-2790

Idaho

$100,000 - $300,000

(208) 334-4250

Illinois

$100,000

(217) 785-0116

Indiana

$100,000

(317) 232-2385

Iowa

$100,000

(515) 281-5705

Kansas

$100,000

(785) 296-3071

Kentucky

$100,000

(502) 564-6027

Louisiana

$100,000

(225) 342-5423

Maine

$100,000

(207) 624-8475

Maryland

$100,000

(410) 468-2090

Massachusetts

$100,000

(617) 521-7794

Michigan

$100,000

(517) 373-9273

Minnesota

$100,000 - $300,000

(651) 296-6848

Mississippi

$100,000

(601) 359-3569

Missouri

$100,000

(573) 751-4126

Montana

$100,000

(406) 444-2040

Nebraska

$100,000

(402) 471-2201

Nevada

$100,000

(775) 687-4270

New Hampshire

$100,000

(603) 271-2261

New Jersey

$100,000 - $500,000

(973) 623-3989

New Mexico

$100,000

(505) 827-4601

New York

$500,000

(212) 480-2289

North Carolina

$300,000

(800) 546-5664

North Dakota

$100,000

(701) 328-2440

Ohio

$100,000

(614) 644-2658

Oklahoma

$300,000

(405) 521-2828

Oregon

$100,000

(503) 947-7980

Pennsylvania

$100,000

(717) 783-0442

Rhode Island

$100,000

(401) 222-2223

South Carolina

$300,000

(803) 737-6160

South Dakota

$100,000

(605) 773-3563

Tennessee

$100,000

(615) 741-2241

Texas

$100,000

(512) 463-6464

Utah

$200,000

(801) 538-3800

Vermont

$100,000

(802) 828-3301

Virginia

$100,000

(804) 371-9741

Washington

$500,000

(360) 753-7301

West Virginia

$100,000

(304) 558-3394

Wisconsin

$300,000

(608) 267-1233

Wyoming

$100,000

(307) 777-7401

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