A fixed annuity is considered to be an agreement between you and an investment company that you have chosen; where the investment company will establish a recurring payment schedule based on your income for you, for a certain period of time that is determined by you at the time that you purchase a fixed annuity. A fixed annuity will typically guarantee that your investment company will pay you both the principal and interest on your vested interests. A fixed annuity is almost like a Certificate of Deposit (CD), where the safety aspects are the same, but the tax advantages for a fixed annuity are much better than what a CD can offer you. A fixed annuity is usually not backed by the FDIC, but it is usually supported by the investment company that you have chosen for the purchase of your fixed annuity.
Additionally, a fixed annuity will normally have a guaranteed interest rate and have a much higher interest rate than a traditional bank CD. A fixed annuity can help you stabilize your income when you may not be fully participating in the labor force or when you are thinking about retiring. Depending on the type of annuity you are looking for, a fixed annuity can either be taxed deferred or turned over into an immediate annuity. Finally, a fixed annuity can be a great option for those retirees that are wanting to make sure that they have a steady income that will further supplement their other retirement options. Consult United Retirement Advisors Group to discuss your options on the various types of annuities.