ANNUITIES

What would happen if you outlived your retirement savings? This may not be an unreasonable supposition as life expectancies continue to increase. To help you avoid outliving your savings, a Northwest Financial Group representative may recommend a tax-deferred annuity.

What is an annuity?

A fixed or variable annuity is designed to provide an income stream for a specified period of time (a number of years or for life), and can be either immediate or deferred. An immediate annuity begins to make income payments soon after you pay the premium. The income payments from a deferred annuity start later and contain an "accumulation" period. The time after income payments start is called the "payout" period.

A tax-deferred annuity is a contract sold by an insurance company that is designed to provide an income stream at specified intervals. Payments of the income stream are based on the claims-paying ability of the issuer. Basically a tax-deferred annuity has two phases. You might call one phase the accumulation phase - and one phase the annuitization or withdrawal phase - when you begin receiving payments.

Once you start withdrawing money from the deferred annuity either randomly or on a regular basis, you will begin paying taxes on the interest earned. If withdrawals are made prior to age 59 1/2, a 10% IRS penalty will apply. Surrender charges may also apply.

Contact us today to arrange a meeting to discuss the role annuities might play in your overall investment strategy.

Variable annuities are long-term, tax-deferred investment vehicles designed for retirement purposes and contain both an investment and insurance component and carry insurance related charges. They are sold only by prospectus. Guarantees are based on claims-paying ability of the issuer. Withdrawals made prior to age 591/2 are subject to 10% IRS penalty tax and surrender charges may apply. Gains from tax-deferred investments are taxable as ordinary income upon withdrawal. The investment returns and principal value of the available subaccount portfolios will fluctuate so that the value of an investor’s unit, when redeemed, may be worth more or less than their original value.