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Yield
- Annuities always pay a higher yield than bank certificates
of deposit.
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Safety
- Annuity products represent unparalleled safety. Insurance companies
are more solvent than banks and your state's guarantee fund covers annuity
deposits up to $100,000 (more in some states) in net present value.
Check with your state department of insurance for complete details.
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Tax
Deferral - You get to decide when you will pay taxes on your interest.
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Liquidity
- After 30 days you can begin receiving interest payments if needed.
In some cases you can also remove additional principal. On top of
that, most consumer friendly annuity products have provisions
that give you access to the principal without penalty in the event
of nursing home confinement, terminal illness, or even unemployment.
Request More Info
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Potential
Lower Social Security Tax
People
have traditionally seen Social Security benefits as the
foundation
of their retirement planning programs. The Social Security contributions
deducted from your paycheck have, in effect, served as a government-enforced
retirement savings plan. You should consider that as your income
gets higher, Social Security replaces a proportionally smaller
percentage of retirement benefits. By placing some or all of
your savings into an annuity you have reduced your taxable income
which would translate into more social security benefits. Request
More Info
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Bypass
probate - One of the major problems of finalizing an estate involves
probate. Or as we call it, the locking up of your funds by the
courts. Unlike CD's, by using the right annuity you can avoid
probate altogether! What
is probate?
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CD VS Annuity
Table
The table
below illustrates the potential losses a bank CD owner could experience
even if the bank CD and the annuity pay the same rates. Request
More Info
Are
you still Paying Taxes on Your Interest ?
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Investment Type
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Bank CD
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ANNUITY
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Invested Amount
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$30,000
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$30,000
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Rate of Return
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6%
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6%
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Tax Bracket
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28%
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28%
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1st year interest
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$1,800
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$1,800
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Tax Collector Gets
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$504
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$0
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You are Left With
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$1,296
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$1,800
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Total Left With
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$31,296
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$31,800
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BOTTOM LINE
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The second year, the interest
rate on the Bank CD is unknown. Whatever it is, it will be of the
interest rate on only $31,296 with Taxes due on that return at the
end of next year.
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The second year the interest
would be the same with a Five Year Guaranteed Return Annuity Product
. The interest rate would be on the complete $31,800.
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These results do not even
include the LOC (lost Opportunity Cost on the taxes paid) which reduces
the value of the CD dramatically more. Using the CD, after 20 years the
total loss to taxes with LOC is projected at $243,588.
Request More Info
If Table Above Is Not Convincing
Enough, How About This!
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Feature/Benefit
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Bank
CD
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ANNUITY
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Safety of Principal
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X
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X
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Tax-Deferred Accumulation
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X
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Avoid Taxes on Social Security
Benefit
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X
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Guaranteed Growth
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X
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X
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Competitive Return
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X (sometimes)
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X
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Lifetime Income
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X
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Guaranteed Survivor Benefits
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X
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Helps With Medicaid
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X (If set properly)
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Avoids Probate
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X
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Why Choose a CD Anyway?
If your investment needs are
very short term (such as 6 months to one year) a CD may work best.
You will not know until you ask!
3rd
Party News
Information herein is not intended as tax advice.
Consult your personal tax consultant for information on your particular
situation. For additional product benefits and limitations, contact an agent.
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