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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
What Happens When Treasury Rates Rise?
The Federal Reserve recently announced the decision to increase short-term interest rates for the first time since 2006. This may leave you wondering how potential interest rate increases could affect your fixed income investment. To understand the correlation between rising Treasury rates and bond prices, think of a seesaw. When interest rates rise, the value of outstanding bonds falls because the interest they pay is less than what investors could receive on a new bond. This could cause the value of your fixed income portfolio to decrease.
Here’s a closer look at how an immediate 1% rise in Treasury rates could impact a fixed income portfolio comprised of U.S. Treasury (UST) bonds with 3-7 and 7-10 year maturities.1
A Fixed-Indexed Annuity Can Help
Purchasing a fixed-indexed annuity can diversify your portfolio and help avoid the negative impact of rising Treasury rates. Unlike Treasury bonds, fixed-indexed annuities credit interest that is based, in part, on the performance of a market index. Additionally, fixed-indexed annuities offer:
- Tax-deferred growth
- Protection from loss
- Access to your money with penalty-free withdrawals2
- Opportunity to receive lifetime income
Talk with your financial professional to see if a fixed-indexed annuity is right for you.
1 Based on the performance of an exchange traded fund that tracks the investment results of an index composed of U. S. Treasury bonds with the indicated remaining maturities.
2 If you withdraw money from an annuity during the early withdrawal charge period, an early withdrawal charge may apply. Early withdrawal charge rates and periods vary by annuity product. An early withdrawal charge will reduce the account value and may have a significant effect on the benefits available with the annuity. Withdrawals and distributions may be subject to income tax and, for some tax qualifications, may be restricted. If withdrawals or distributions are taken prior to age 59½, a 10% federal penalty tax may apply.
This information is not intended or written to be used as legal or tax advice. It was written solely to provide general information and support the sale of annuity products. You should seek advice on legal or tax questions based on your particular circumstances from an attorney or tax advisor.
When you buy a fixed-indexed annuity, you own an insurance contract. You are not buying shares of any stock or index. All guarantees are backed by the claims paying ability of the issuing insurance company. This flier discusses some aspects of a fixed-indeed annuity. Please read your annuity contract for complete terms and conditions, including information about early withdrawal charges and market value adjustments that may apply during the early withdrawal charge period. Products issued by Great American Life Insurance Company and Annuity Investors Life Insurance Company, members of Great American Insurance Group, Cincinnati, Ohio.
Not FDIC or NCUSIF Insured • No Bank or Credit Union Guarantee • Not Insured by any Federal Government Agency • Not a Deposit • May Lose Value