Fee-Based Variable Annuities

Fee-based variable annuities have gained significant popularity among investors seeking a balanced and flexible retirement planning tool. These financial vehicles provide individuals with a combination of investment growth potential and the assurance of guaranteed income during their retirement years.

What are Fee-Based Variable Annuities?
Fee-based variable annuities are essentially long-term contracts between individuals and insurance companies. They serve as a retirement savings vehicle, offering a wide range of investment options within a tax-deferred framework. Unlike traditional annuities, which charge upfront fees and surrender charges, fee-based variable annuities are structured with a fee-only compensation model, making them more transparent and appealing to investors.

Investment Flexibility
One of the key advantages of fee-based variable annuities is the investment flexibility they offer. Investors have the freedom to choose from a variety of investment options, including mutual funds, exchange-traded funds (ETFs), and separately managed accounts (SMAs). This gives individuals the ability to tailor their investment strategy based on their risk tolerance, time horizon, and financial goals.

Tax Benefits
Fee-based variable annuities also provide tax advantages for retirement savings. As a tax-deferred investment vehicle, individuals can grow their investments and earn dividends without incurring immediate tax liabilities. Taxes on investment gains are only triggered when withdrawals are made during retirement, potentially allowing for significant tax savings over time.

Guaranteed Income
One of the distinguishing features of fee-based variable annuities is the option to convert the accumulated account value into a guaranteed income stream during retirement. This feature, known as a lifetime income benefit rider, ensures a steady and predictable income flow regardless of market conditions. The ability to secure a guaranteed income stream provides peace of mind, helping individuals plan for a stable retirement lifestyle.

Fees and Costs
As the name suggests, fee-based variable annuities are structured to minimize upfront costs and provide transparent fee structures. The fees typically include investment management fees, mortality and expense risk charges, administrative fees, and rider fees for additional benefits, such as the lifetime income benefit rider. Investors must understand the fee structure and evaluate the total cost when considering fee-based variable annuities.

Fixed Annuities:

Fixed annuities are an excellent investment tool for individuals seeking stability and security in their long-term financial planning. These annuities serve as powerful vehicles for accumulating wealth and providing a consistent stream of income during retirement. With their straightforward structure and predictable returns, fixed annuities have become increasingly popular among individuals and families looking for a reliable source of financial stability.

One of the key advantages of fixed annuities lies in their guaranteed interest rate. Unlike variable annuities, which are tied to market performance, fixed annuities offer a fixed rate of return that is determined at the time of purchase.

Whether it's a bear market or an economic downturn, fixed annuities remain steadfast, shielded from the unpredictable swings of the financial world. This stability provides peace of mind to individuals who place a premium on the preservation of their hard-earned wealth.

Additionally, fixed annuities offer tax advantages that can further enhance their appeal. The growth of funds within the annuity is tax-deferred, meaning that taxes are not applied until distributions are made.

Early withdrawal from annuities may result in penalties and surrender charges. As with any investment, thorough research and consultation with a trusted financial advisor are crucial to ensure that fixed annuities align with your financial objectives.

Fee-Based Indexed Annuities

Fee-based indexed annuities offer growth potential based on the performance of a specific index, such as the S&P 500, while also providing a level of downside protection. This combination of growth potential and protection makes fee-based indexed annuities an attractive retirement asset accumulation strategy for many individuals.

However, to determine the suitability of fee-based indexed annuities for our clients, we need to thoroughly understand their current retirement assets. Evaluating your accumulated assets up to this point is an essential step in designing a comprehensive retirement plan tailored to your specific needs and goals.

To discuss your retirement assets and explore the potential benefits of fee-based indexed annuities, please schedule a consultation with one of our experienced advisors at Momentous Wealth Advisors. We are here to provide you with the guidance and expertise needed to plan for a financially secure future.