Income Annuities · Educational Guide
Considering an income annuity? Start by understanding the trade-offs.
Income annuities are insurance contracts that provide income payments according to the terms of the contract and the claims-paying ability of the issuing insurance company. They also carry trade-offs worth reviewing carefully before you commit any portion of your savings.
Planning-first, not product-first
Salem, NH — serving NH, MA, and New England
Educational, no-pressure conversations
Coordination with your CPA and attorney where appropriate
The basics
What an income annuity generally is
A income annuity is a contract issued by an insurance company. In general, you contribute funds in exchange for income payments based on the terms of the contract. Any guarantees are subject to the contract and to the claims-paying ability of the issuing insurance company.
That structure can appeal to people who want a portion of retirement resources positioned differently from market-based investments. However, income annuities also involve trade-offs, including reduced liquidity, potential charges, and tax considerations that should be carefully evaluated before purchase.
- An insurance contract, not a bank product or a market investment
- Income payments according to the terms stated in the contract
- Typically a defined surrender-charge period during which withdrawals may be limited or charged
- Tax treatment that differs from taxable accounts and should be reviewed with your tax professional
Trade-offs worth reviewing
- Surrender periods and early-withdrawal charges
- Liquidity limitations if you need funds sooner than expected
- Inflation considerations over a long retirement
- Tax considerations on withdrawals, depending on your circumstances
- Suitability — an income annuity is not appropriate for everyone
Before you decide
Questions to consider before choosing an income annuity
What portion of my savings, if any, would be appropriate to commit?
How long is the surrender period, and what happens if I need funds earlier?
What are the total costs, charges, and rider expenses?
How would withdrawals be taxed in my situation?
How does this fit alongside my other retirement accounts and income sources?
Guide
Income Annuity Questions to Ask Before You Decide
A short, plain-language list of the questions worth asking any agent or advisor before committing to an income annuity.
What happens next
- 1We confirm your request and send the guide you asked for.
- 2A brief call to understand your situation and the questions on your mind.
- 3If it makes sense, we schedule a longer conversation. If not, you keep the guide and there is no follow-up pressure.
Questions people ask
Frequently asked questions
Not before understanding your situation. We help you evaluate whether an annuity may or may not have a role in your broader plan. Suitability depends on your goals, liquidity needs, time horizon, tax situation, and circumstances.
Based in Salem, New Hampshire, Guardian Financial Services works with individuals, couples, families, and business owners throughout southern New Hampshire, Massachusetts, and the broader New England region.
Have a conversation before you make a decision.
A short, no-pressure conversation can help you understand the trade-offs and whether any next step makes sense for your situation.
Important disclosures
A fixed annuity is a long-term, tax-deferred insurance contract designed for retirement. It allows you to create a fixed stream of income through a process called annuitization and also provides a fixed rate of return based on the terms of the contract. Fixed annuities have limitations. If you decide to take your money out early, you may face fees called surrender charges. Plus, if you're not yet 59½, you may also have to pay an additional 10% tax penalty on top of ordinary income taxes. You should also know that a fixed annuity contains guarantees and protections that are subject to the issuing insurance company's ability to pay for them.
All deferred annuities are long-term investment alternatives designed for retirement purposes. All annuity contract and rider guarantees, or annuity payout rates, are subject to the claims-paying ability of the issuing insurance company, which is solely responsible for obligations under its contracts. Withdrawals will generally be subject to a surrender penalty if redeemed during the surrender charge period and if they are in excess of any free withdrawal provisions. Since annuities grow tax-deferred, any withdrawals made prior to age 59 1/2 may be subject to a 10% federal tax penalty in addition to any gains being taxed as ordinary income.