FINANCIAL FRIDAY - WHAT ARE ANNUITIES?

FINANCIAL FRIDAY - WHAT ARE ANNUITIES>

   First of all Happy Friday, another week down and another day to celebrate life.. Yes.. take time out to be thankful.. Often times, including myself,,I take things for granted. Like seeing you kids or wife,.. Because we all know life can end in a instant.. because of drunk or drugged out people... If theirs a fear of mine,, is that unexpected accident with a drunken person.. because you have no control if a intoxicated person hits and kills you.. I Pray and applaud law enforcement when they get those lowlifes off the street.. 

    Ok,, back to my topic,, What are annuities?

Annuities are simply a solution to financial long term planning .. In other words its the savings plan version of a life insurance policy.. Still confused?

ok.. 

Annuities are classified as either deferred or Immediate? 
ok.. What does that mean?

Deferred 
1) tax deferred - you the owner invests a lump sum ..like a rollover 401k or IRA account .
2) You make regular payments over the course of many years.
3) That period of cash growth is called the accumulation phase..

Immediate 

1) Different ?
2) You the owner deposits a lump sum and starts receiving payments right away.
3) Based on the terms of the annuity contract.. Example .. $$ per month until a certain age..

Now Accumulation phase..
1) This only applies to deferred annuities 
2) During this phase or time your contributions are gradually building up.
3) Early withdrawal during this phase may face a surrender charge.
40 But some annuities do allow partial withdrawals within the contract ,, avoiding a penalty fee.

Pay out Phase..
  Period certain- choose the time period- fro example 30 years.
  YOU SIMPLY get payments for 30 years..
  Now if you die early like 15 years-- 
  the remaining 15 year will continue being paid,, if you designated a beneficiary,, be sure to do that..
  Usually its your children...
   Now if you live long.. and the 30 years is attained,, the payout ends.. Enjoy the money and your life..

Now Life time payment,,,
 As long as you live,,    you get paid $$
 Common sense tells you if you die,,, No more $$ so you need to live long!!

Now are you still with me.. I know its alot  to recall.But I'm making it as simple as I can.. of course do your own research.. and need be,, speak with a financial advisor you trust,,they will be happy to share their knowledge,, 

<life time payment w/ period certain..
  Its a combination of the above mentioned.. 
  ok.. explain,,
 1) you decide on 30 years.. 
 2) If you die in the 15th year.. the payment continues for another 15 years..to your beneficiary,,, 
Now if you live past the 30 years.. the payments continue until you die.. So live long,, if you want everything in life to pay off.. that is if you made the right decision's with such investments.. or savings plans...

Ok.. Now one more thing ..

Joint and Survival Annuities- usually for married or couples,, 
1) One of  us dies.. the payment continues until the spouse dies.. 

now remember annuities is just another financial tool,, and it may not be for you,, that's why you need a financial advisor to explain in more detail.. 

But here's my take on the subject..

simply put an annuity is like a life insurance policy.. 
ok,, explain,,

Annuities 
1) pays a set amount per month.. quarterly ,monthly .. annually to assist you in meeting future financial needs,, usually when you retire , when you have a set income,,, like social security, like your pension... or 401 k,, payouts,, in other words,, its another tool or payment to assist you in your retirement needs.. 

Life Insurance pays the money when you die... Annuities pay out at certain age.. understand..
but you
Now like gambling.. Life Insurance your making a bet that you live long enough that any payments you made will match the payout or worth the investment.  Still confused?
Lets say you pay 300 a month or year for insurance,, and you die  soon after,, the company pays the benefit.. to your beneficiary. which means.. your family wins,,, the company loses. So.. the company,, wants you to live long making payments., because the money you are paying.. Guess what?
 They are loaning that money to Banks, to investors at a high rate of return.. in other words they are making money.. and they are.. 

Just a food for thought,, Have you head of any insurance companies claiming bankruptcy,,, ? 

Now back to my lesson ..

Annuity

1) You give the company  a lump sum.. like 600,000.00 
Now your betting that you live a long life.
1) IF YOU DO.. THE COMPANY KEEPS PAYING YOU MONTHLY.. 
2) Now the Company can possibly pay you more than you put in.. Understand..? It means you will get more money than you paid into .. Thus your the winner. But stats say,, Most folks don't.. and that's why they make the bet.. But isn't life a bet anyways.??. We all want to live long,,, But you never know ,, that's why people purchase life insurance or annuities.. its just another tool for your financial stability,, Its the secret tools the rich people use..

Now if you die too soon,, then the payment stops.. or only pay up to a certain period.. ..Thus the companies win..Just remember,, Insurance companies are making money on every $$ paid.. to them...

Final thoughts,
 A fixed annuities is - A guaranteed rate that is fixed.. in other words a fixed rate of return.. 

Fixed Index Annuity is - based n market index.. Like a S and P 500.. 
for EXAMPLE,,, Min cap can be 0% with the max set at 8 % .. Ok.. What happens f it goes higher,, well the insurance co has to make money,, but at least your making something,, Now understand why insurance companies are making money?? You will get you fair share.. if you live long, But regard less insurance companies are making their money.. That's why share in the wealth,, and tools that the rich and famous use to create wealth management,, In other words,, make your money work hard for you, by making the right investment choices,,,

Now understand annuities have no limits,, on contribution,,, you can contribute as much as you want, like a IRA , which are limited to a certain amount per year..

Does this make sense?
Ok.. its just another vehicle for financial planning... Its a choice many people make when they want to rollover or transfer their 401k, or IRA into annuities,, 

why? to take advantage of the payout phase later.. Its another tool to add with pensions, savings and social security payouts when your older.. 

Now.. I hope this has clarified matters or made it more interesting tools to think about.. But just remember ,, Time is marching on. and preparing for the future starts now.. The longer you wait, the harder for you to be ready when you do turn 65 or 70 or whenever you decide your working years are done..  If anything.. start thinking about saving your money at any level..  Because like building a house you have to have a firm foundation.. You can get an annuities if you don't have a large amount to invest and you have to patient to let that money sit,, that's why its an investment., its something that will pay off later for you and your loved ones..  patience.. in the money game of life is what will build and develop a great wealth portfolio.. I know.. Its not easy to save,, but saving today , can make the future less stressful..Because you were patient and committed in building a sound wealth management program.. Like anything in life,, the best things in life often take the most time to get or effort.. Its just human nature,, if you had to work hard to get things,, You are more willing to fight for what you have.. so go out and save,, and make sound buying decisions.. If you can pay with it straight out..without using credit cards,,, then do it,, But using Credit cards,, is the banks way to make money while the rest of us,, suffer paying interest for things that would have been cheaper if I would of paid for it,, straight out!!!
Have a great financial friday,, and enjoy Life,, Until my next financial blog.. Be safe and save a little for your future!!
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