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What does the perfect retirement look like to you? It might be relaxing on the beach, traveling the world, giving back to your community or simply spending time with family. The fact is, no matter how you plan to spend your retirement, you need a solid financial plan to get there.
An annuity might be one solution to help you achieve your goals.
What is an annuity?
Simply put, an annuity is a contract between you and an insurance company. It is designed to protect and grow your money, and then provide a stream of income during your retirement.
Here are some reasons you might want to consider purchasing an annuity:
- Protection and growth: You want to protect your money from loss while still having growth opportunity.
- Tax-deferral: You want to take advantage of tax-deferred growth.
- Retirement income: You want to turn the money you’ve saved into a regular paycheck for a specified number of years or for life.
- Death benefit: You’re looking for an efficient way to leave a legacy for your loved ones.
Types of Annuities
The Power Of Protection with a fixed-indexed annuity
With a fixed-indexed annuity, you can take advantage of potential market growth, without the worry of losing your money if the market declines. Additionally, any interest credited to your account value is locked in at the end of each one-year term and cannot be lost due to future market performance.
The story of Bill and Karen
Bill invested his $100,000 IRA in stocks that make up the S&P 500® Index, while Karen purchased a fixed-indexed annuity with a purchase payment of $100,000. Over a 10-year period, both Bill and Karen faced a dramatic market. However, Karen’s purchase payment and previously credited interest remained protected, and her account value never dropped below $100,000. Conversely, the value of Bill’s investment dropped as low as $62,373 and took the next four years to recover, because his investment didn’t offer downside protection.
While past performance does not guarantee future results, with a fixed-indexed annuity, you can be certain that your money will be protected against loss if you hold your annuity through the early withdrawal charge period.
This graph illustrates historical performance of the S&P 500® across 10 years, excluding dividends paid on the stocks included in the index. The hypothetical fixed-indexed annuity in this example uses the S&P 500® annual point-to-point index method with terms beginning on December 20 to calculate the indexed interest rate for each term. For purposes of this example a 5.0% cap, 0% index spread, 100% participation rate and one-year term is applied for all terms in the period. However, during the illustrated period, the actual caps that we applied to our fixed-indexed annuities varied from term to term and ranged from 3.25% to 10%. Caps, spreads, participation rates and terms are subject to change. Indexed interest is credited only on amounts held for the entire term. Terms start on the 6th and 20th of each month. A different term start date would affect the performance of the hypothetical fixed-indexed annuity and result in higher or lower account values than those shown in this example. The term for a purchase payment begins on the next start date after we receive that purchase payment. This example assumes no money is withdrawn from the annuity. Early withdrawal charges will apply if money is withdrawn during the early withdrawal charge period. See the disclosure document for the early withdrawal charge schedule.
The S&P 500 Index is a product of S&P Dow Jones Indices LLC (“SPDJI”), and has been licensed for use by Annuity Investors® Life and Great American Life®. Standard & Poor’s®, S&P®, and S&P 500® are registered trademarks of Standard & Poor’s Financial Services LLC (“S&P”); Dow Jones® is a registered trademark Dow Jones Trademark Holdings LLC (“Dow Jones”); and these trademarks have been licensed for use by SPDJI and sublicensed for certain purposes by Annuity Investors Life and Great American Life. Annuity Investors Life and Great American Life annuity products are not sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, or their respective affiliates, and none of such parties makes any representation regarding the advisability of purchasing said products nor do they have any liability for any errors, omissions or interruptions of the S&P 500 Index.
When you buy a fixed-indexed annuity, you own an insurance contract. You are not buying shares of any stock or index. For purposes of this example, Bill’s account is assumed to be an IRA so that the dividends, gains and losses over the period of comparison are tax-deferred. For most stock investments outside of a retirement plan, dividends are subject to income tax at capital gains rates when paid, and long term capital gains are subject to income tax at capital gains rates when the stock is sold. For annuity contracts, income earned on the contract is subject to income tax as ordinary income when withdrawn. If you are under age 59½, the taxable amount may also be subject to a 10% federal penalty tax. Generally income tax rates on ordinary income are higher than capital gains tax rates on long-term capital gains and qualified dividend income.
This information is not intended or written to be used as legal or tax advice. It was written solely to support the sale of annuity products. You should seek advice on legal or tax questions based on your particular circumstances from an independent attorney or tax advisor.
All guarantees are backed by the claims-paying ability of the issuing insurance company. Products issued by Great American Life Insurance Company® and Annuity Investors Life Insurance Company®, members of Great American Insurance Group, Cincinnati, OH.
Not FDIC or NCUSIF Insured • No Bank or Credit Union Guarantee • May Lose Value • Not Insured by any Federal Government Agency •Not a Deposit