Annuities that turn savings into income you cannot outlive.

How an annuity can help you

Most retirement worry comes down to two questions: will I lose what I saved, and will it last as long as I do? Annuities are built to answer both. They are the only financial product that can pay you a guaranteed income for the rest of your life, no matter how long you live or what the market does.

• Lifetime income guaranteed by the issuing carrier that you cannot outlive
• Principal protection on fixed and fixed indexed contracts
• Tax-deferred growth, you pay no tax on gains until you withdraw
• Typically avoids probate by paying your named beneficiary directly
• Rates are often higher than bank CDs on comparable terms, though annuities are not FDIC insured and are not bank deposits
• Optional riders for income growth, long-term care, or a death benefit

1. Fixed annuities

The simplest type. The carrier credits a set interest rate for a set number of years, much like a bank CD but usually at a higher rate and with tax deferral. A multi-year guaranteed annuity (MYGA) locks the rate for the full term, so you know the exact value on day one and at maturity. Best for savers who want certainty above all else and do not need market upside.

• Rate and principal are guaranteed by the issuing carrier, subject to its claims-paying ability
• No market risk and no annual fees in most contracts
• Terms commonly run 2 to 10 years
• Predictable, easy to compare, easy to understand

2. Fixed indexed annuities

Your principal is still guaranteed by the issuing carrier, but instead of a flat rate your interest is linked to a market index such as the S&P 500. You are not investing in the index or in the stock market. In a good year you share in the gains up to a cap or participation rate. In a bad year your credited interest is 0%, you do not lose money to the market. This is the safe-money middle ground: more upside than a fixed annuity, none of the downside of being invested directly.

• Principal protected with a 0% floor, your worst year is a flat year
• Market-linked growth subject to caps, spreads, or participation rates
• No advisory or management fees on most contracts we place; optional riders carry a charge
• Optional income riders that grow your future paycheck the longer you wait

3. Variable annuities

A variable annuity invests your money in subaccounts that work like mutual funds. Your account value rises and falls with those investments, so there is more growth potential and real risk of loss. Variable annuities also carry ongoing fees: mortality and expense charges, subaccount fees, and rider charges. They are securities products and require a securities license. We do not place variable annuities, and we will tell you honestly when your existing one is already doing its job.

• Growth tied to market subaccounts, with the risk of loss
• Ongoing fees that fixed and fixed indexed contracts usually do not have
• Sold only by securities-licensed representatives through a prospectus
• We will review one you already own and explain what it costs you

How the three types compare

Fixed gives you a known rate with no risk. Fixed indexed gives you market-linked upside with no market loss. Variable gives you the most upside and the most risk, plus fees. Choosing well is less about which product is best in general and more about which risk you are unwilling to take with this particular money.

• Want certainty and a set rate: fixed annuity
• Want growth potential without losing principal: fixed indexed annuity
• Want full market participation and accept loss and fees: variable annuity
• Want a paycheck for life: any of the three can add lifetime income, the guarantees differ

Immediate vs deferred

An immediate annuity starts paying you within about a year, useful if you need income now. A deferred annuity grows first and pays later, useful if you are still a few years out from retirement. Both fixed and fixed indexed contracts come in either form.

Funding an annuity

You can fund an annuity with after-tax savings or move qualified money over with a direct rollover from a 401(k), 403(b), TSP, or traditional IRA. Done as a direct transfer, there are no taxes and no penalties. We handle the paperwork with your current custodian so nothing touches your hands and nothing becomes taxable by mistake.

• 401(k), 403(b), and TSP rollovers
• Traditional and Roth IRA transfers
• 1035 exchanges from an existing annuity or life policy
• After-tax, non-qualified funds

Annuity rates in Michigan right now

Annuity rates move week to week and they are not the same at every carrier. A five-year multi-year guaranteed annuity at one company can pay noticeably more than the same term at another, and the bank down the street rarely wins that comparison. Because we are independent and contracted with more than 40 carriers, we shop the whole list for you instead of selling one company's product. Ask for the current rate sheet and you will see the top guaranteed rates by term on one page.

• Current MYGA and fixed annuity rates by 2, 3, 5, 7, and 10 year terms, subject to change
• Fixed indexed annuity caps, participation rates, and bonus offers
• Carrier financial strength ratings shown next to each rate
• Updated as carriers change rates, usually every few weeks

Annuity vs CD vs bond vs money market

People comparing safe places for retirement money usually look at all four. A CD is FDIC insured and taxed every year even if you do not touch the interest. A bond can lose value if you sell before maturity. A money market rate can drop the month after you open it. A fixed annuity locks your rate for the full term, grows tax deferred, and can be turned into lifetime income later. The right choice depends on when you need the money and whether taxes now or taxes later hurts you more.

• CD: FDIC insured, taxed annually, often a lower guaranteed rate; an annuity is not FDIC insured
• Bond: market value can fall before maturity
• Money market: rate can change at any time
• Fixed annuity: rate locked for the term, tax deferred, income options

Who an annuity is right for, and who it is not

We will tell you when an annuity is not the answer. If you may need all of this money within the next couple of years, or it is your only emergency fund, a surrender period works against you. Annuities fit best when you are protecting money you intend to keep for the long term or turn into income.

• Good fit: you are 55 to 80 and want income or principal protection
• Good fit: you are rolling over a 401(k) and want to stop losing sleep over market swings
• Poor fit: this is your emergency cash or you need it all within two years
• Poor fit: you want full market participation and accept the losses that come with it

Where we help

Certified Benefit Advisors is located at 475 East Columbia Avenue, Suite 8 in Battle Creek, Michigan. We serve all of Michigan, including Kalamazoo, Jackson, Grand Rapids, Lansing, Coldwater, Marshall, Albion, Hastings, and the surrounding counties, and are licensed in about ten other states. We meet in our office or in your home, and there is never a fee for our time.