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The benefits of an income annuity

Annuities are an important pillar in your retirement plan and can reduce risks as you plan for the future. Learn more about how valuable annuities can be.

Article:

Updated: Published:

Matt Lyon Reviewed by: Editorial contributors

Note:

Information courtesy of USAA Life Insurance Company and USAA Life Insurance Company of New York.

 

There are many retirement risks. Luckily, there's a pillar you can add to your retirement and wealth management plan to help reduce some risks: an income annuity.

Income annuities – also referred to as immediate annuities, help provide a simple and reliable solution to retirement income needs.

Guarantee your retirement income.

Years ago, many retirees relied on a pension as their income stream. Today, many employers have eliminated pension plans. More people are responsible for creating their own retirement income. An income annuity provides a guaranteed income‍ ‍ See note 1 stream in retirement that can help you meet expenses and maintain your standard of living.

Make your money last.

One of the most common retirement risks is longevity risk, or the risk of outliving your money. Advances in medical care are increasing life expectancies. Many people will live 20 or more years after they retire. Retirees often fear running out of retirement money, and they vastly underspend. An income annuity can provide you the freedom to spend the income generated without worry.

Retire with peace of mind no matter the market.

Annuities are not the same as investments. Income annuity payments are not correlated to market performance. Having an income annuity payment stream may reduce the risk of retiring during a down market.

Keep it simple.

An income annuity is simple to maintain. Market investments require balancing withdrawals with ever-changing stock market conditions. Alleviate the stress associated with having to draw down your retirement savings or limit your spending in retirement when stock markets are down with an income annuity.

Protect your income.

Income annuities are insurance products and have no relation to investments or the markets, protecting you from volatility. An income annuity may also provide limited protection against fraud, since the money you used to purchase the income annuity is no longer available to fraudsters.

While income annuities can serve a vital role for generating retirement income, keep in mind that before making a long-term commitment you need to do your homework. You should understand the terms of the contract with your annuity provider. This includes what is guaranteed, when payments start, length of payments, who else gets paid and under what terms, other withdrawal options, and taxation. Since your retirement plan depends on your unique circumstances, seek help when needed.

Let us help you review your financial plans and find the best way to reach your retirement goals. Call us at 800-531-3392.

Check out our annuity calculator‍ ‍ See note 2

Use our calculator to see what monthly income you could get from an immediate annuity.

Calculate Now

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Related footnotes:

  1. This material is for informational purposes. Consider your own financial circumstances carefully before making a decision and consult with your tax, legal or estate planning professional.

Related footnotes:

  1. Guarantees apply to certain insurance and annuity products and are subject to product terms, exclusions and limitations and the insurer's claims-paying ability and financial strength.

  2. This tool is not intended to offer any tax, legal or financial advice. It is always a good idea to consult your tax, legal and financial advisors regarding your specific situation. Furthermore, this tool does not ensure the availability of, or your eligibility for, any specific product with USAA Life insurance companies.

Related footnotes:

  1. An annuity is a long-term insurance contract issued by an insurance company designed to provide a retirement income stream for life. Once the contract principal is converted into an income stream, you will no longer have access to your principal as a lump sum. Terms, conditions, limitations and surrender charges may apply.

  2. Money not previously taxed is taxed as income when paid. Withdrawals before age 59½ may be subject to a 10% federal tax penalty.

  3. Guaranteed Retirement Income Plan (GRIP): Forms ASI94832ST 10-11, ASI97207AK 10-11, ASI94878AR 10-11, ASI97208AZ 10-11, ASI94875CA 10-11, ASI97165CT 10-11, ASI97123IA 10-11, ASI97032ID 10-11, ASI94876IL 10-11, ASI97195KS 10-11, ASI97170MA 10-11, ASI94940MD 10-11, ASI94879MN 10-11, ASI94921MT 10-11, ASI94920NJ 10-11, ASI97268OH 10-11, ASI94877OK 10-11, ASI94941OR 10-11, ASI94922PA 10-11, ASI94833TX 10-11, ASI97124VA 10-11, ASI94874OS 10-11, NSI94897NY 10-11, NSI97130NY 10-11

  4. Life insurance and annuities provided by USAA Life Insurance Company, San Antonio, TX and in New York by USAA Life Insurance Company of New York, Highland Falls, NY. All insurance products are subject to state availability, issue limitations and contractual terms and conditions. Each company has sole financial responsibility for its own products.

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