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Variable Plans
Many fixed annuities include a death benefit, ensuring that your beneficiaries will receive a payout if you pass away before receiving the full value of your annuity payments.
Phases of a Variable Annuity:
- Accumulation Phase: During this phase, you invest a lump sum of money or make periodic payments into the annuity. Your contributions are allocated to investment options of your choice, which may include stocks, bonds, or mutual funds. T The growth of your investment depends on the performance of these underlying assets, so the value of your annuity may fluctuate with the market.
- Payout Phase: Once you reach retirement age or a designated date, you can begin receiving regular payments from the annuity. The amount you receive is variable, as it depends on the performance of your investments during the accumulation phase. If your investments perform well, your payments may be higher; if they perform poorly, your payments could be lower.
Advantages
Risk Factor
While variable annuities offer growth potential, it’s important to note that they also carry more risk than fixed annuities. The value of your investments can go up or down, and your income in retirement is not guaranteed to be a specific amount.
- Fees: Variable annuities often come with higher fees compared to other investment vehicles. These may include administrative fees, mortality and expense charges, and investment management fees, which can reduce your returns over time.
- Living Benefits: Many variable annuities offer optional riders for living benefits, such as guaranteed lifetime withdrawal benefits (GLWB) or income riders, which can provide a guaranteed income stream during retirement regardless of market performance, though they usually come at an additional cost.