An annuity is a long-term investment made with an insurance company. They can be used to help protect principal and / or provide income during retirement, often for life.

There are three main types of annuities:

Fixed Annuity
Fixed Indexed Annuity (FIA)
Variable Annuity (VA)

Annuities are complex financial instruments offered by many different insurance companies. As a result, there are many different variations of the three main types, each seeking to accomplish specific goals. We've heard many people make negative comments about annuities. However, we at Thornwood believe that certain annuities have a place in a client’s portfolio and, if used properly, they can be a critical tool for retirement planning.

Annuities can be used to help hedge against outliving your money. They can be a way to utilize contract guarantees for a steady income stream or as protection against untimely market downturns.

However, they are complex financial vehicles with many add ons and fine print. Annuities should not be entered into without professional guidance and a full understanding of their place in the overall strategy.

We have over 30 years of experience constructing retirement plans utilizing various annuity strategies and riders as a component to help provide guaranteed income and principal protection. As independent advisors, we are licensed to provide and have access to the entire universe of annuity solutions. If an annuity is a good fit for your situation, we can help choose the best fit from who we feel are the top companies.

An annuity may not be as strong of a growth investment or a cookie cutter solution for everyone but there are strong reasons why one may want to invest in one:

Provide a potential hedge against outliving your money.
Potential for a predictable income stream to create future budgets.
Features and riders offering protection against large untimely market downturns..
Potential for growth with limited risk.

For more information on if and how an annuity may be right for you, contact us.

Investors are advised to consider the investment objectives, risks, and charges and expenses of the variable annuity and its underlying investment options carefully before investing. The applicable prospectuses for the variable annuity and its underlying investment options contain this and other important information. Please call the product sponsor for free prospectuses. Read them carefully before investing or sending money. Products and features are subject to state availability. 

The investment return and principal value of the variable annuity investment options are not guaranteed. Variable annuity sub-accounts fluctuate with changes in market conditions. The principal may be worth more or less than the original amount invested when the annuity is surrendered.

Fixed Annuities are long term insurance contacts and there is a surrender charge imposed generally during the first 5 to 7 years that you own the annuity contract. Withdrawals prior to age 59-1/2 may result in a 10% IRS tax penalty, in addition to any ordinary income tax. Any guarantees of the annuity are backed by the financial strength of the underlying insurance company.

Indexed annuities are insurance contracts that, depending on the contract, may offer a guaranteed annual interest rate and some participation growth, if any, of a stock market index. Such contracts have substantial variation in terms, costs of guarantees and features and may cap participation or returns in significant ways. Any guarantees offered are backed by the financial strength of the insurance company. Surrender charges apply if not held to the end of the term. Withdrawals are taxed as ordinary income and, if taken prior to 59 ½, a 10% federal tax penalty. Investors are cautioned to carefully review an indexed annuity for its features, costs, risks, and how the variables are calculated.

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