Annuities 101: Annuity Basics for Retirement Planning

Fixed and fixed index annuities can offer benefits that may fit your retirement needs, but do you know how they work, are sold and regulated? Below you will find the answers to these common questions and more.

Annuity information for retirement

A common concern for many retirees is running out of income or outliving their savings during retirement. Owning an annuity may help ease that concern. An annuity is a contract between you and an insurance company designed to assist you in meeting your retirement income goals. 1^The Securities and Exchange Commission “Fast Answers: Annuities”Fixed index annuities (“FIAs”) can be non-qualified or qualified (including Individual Retirement Accounts). Qualified and non-qualified FIAs are treated similarly with the biggest difference between them being the premiums used to purchase a qualified FIA may not be treated as taxable in the year the premium is paid to the insurer. 2^Insurance Information Institute “What are the Different Types of Annuities” FIAs can offer benefits, including tax deferral, principal protection and guaranteed lifetime income.

Annuities are a Mainstream Retirement Opportunity

A retirement readiness study by the Index Annuity Leadership Council (“IALC”) found 78 percent of workers are looking for a source of lifetime income. 3^Indexed Annuity Leadership Council “The State of America’s Workforce: The Reality of Retirement Readiness” 2018 As there becomes a larger demand for guaranteed lifetime income, more retirees are looking to annuities as a retirement income product. Another study by the IALC found Americans are concerned about running out of money during retirement, and are almost equally worried that while they are alive, they won’t have the funds to enjoy retirement and cover basic necessities. 4^Indexed Annuity Leadership Council “Americans’ Top Three Retirement Fears” 2018

While addressing that concern, fixed and fixed index annuities have started to become part of planning a balanced retirement portfolio, as more retirees look for benefits like lifetime income.

Fixed Index Annuities are an Insurance Product Sold by Insurance Agents

One feature annuity contracts offer is converting accumulated wealth into income. Annuities are sold by licensed insurance agents who work with clients to provide information about retirement products and options. Some agents are dedicated to selling a product from a specific company, while other agents are considered independent and can sell products from different insurance carriers.5^Financial Industry Regulatory Authority “Products and Professionals”   Agents are required to have an insurance license to sell fixed and fixed index annuities to consumers.

Annuities are Regulated by State Insurance Agencies

Fixed and fixed index annuities are primarily regulated by state insurance regulatory authorities. Every state has an insurance commissioner who regulates and supervises the insurance and annuity products sold within their state. 6^Insured Retirement Institute “State Regulation of Annuities” Your state insurance commissioner’s office likely provides information about insurance carriers, insurance licensed producers and may provide information about annuity products, as well. 7^National Association of Insurance Commissioners “States and Jurisdictions”

Talk to a licensed agent to find out more about annuities and how they may help you reach your retirement income goals.




The information provided is for informational purposes only and does not constitute advice. For specific details on how this may apply to your personal situation, contact your personal financial advisor or insurance agent for more details. American Equity contracts are only sold through independent agents. Please contact our home office Agency Services department at (888) 221-1234 option 3, or your state insurance department, to see if there is an independent insurance agent in your area appointed to sell American Equity annuity contracts.