What is an Annuity:

    A contract sold by an insurance company designed to provide payments to the holder at specified intervals, usually after retirement. The holder is taxed only when they start taking distributions or if they withdraw funds from the account. All annuities are tax-deferred, meaning that the earnings from investments in these accounts grow tax-deferred until withdrawal. Annuity earnings are also tax-deferred so they cannot be withdrawn without penalty until a certain specified age.

    Fixed annuities guarantee a certain payment amount. Variable annuities do not, but they do have the potential for greater returns. Both are relatively safe, low-yielding investments. An annuity has a death benefit equivalent to the higher of the current value of the annuity or the amount the buyer has paid into it. If the owner dies during the accumulation phase, his or her heirs will receive the accumulated amount in the annuity. This money is subject to ordinary income taxes in addition to estate taxes.

What you need to know about Annuities:

    Annuities can be a viable retirement income vehicle or in most cases they can be a grossly high cost version of a good sales job that may not be in your best interest.  The best way to not get taken is to know what all the costs are by asking the right questions and being prepared.  If you are sold this insurance product by a salesman--you may be highly likely to have buyer's remorse.  Why:  because of the various high costs the insurance charges you to pay for some of the guarantees and expenses.  Be very careful!

    Annuities are a complicated investment and should not be entered into lightly without thorough evaluation.  These insurance products are so elaborate--that studying the prospectus may lead you to throwing up your and hands and agreeing to the plan.  Be Careful.

    There are many types of annuities including; Variable, Fixed, Income, Immediate, and even Longevity Annuities.

   The biggest concern I have is the cost drag per year and the surrender charges.  There are plenty of other fees wrapped into the vast majority of annuities.  And if you buy this you may have to keep it because of the high surrender charges.  Buyer's remorse is very high in the Annuity arena.

    The disadvantages can outweigh the advantages if you truly look at all the costs and rules.  A taxable account may be better because of low costs and accessibility.  High annual fees and bad estate planning vehicle are some serious causes for concern.  A very long holding period may have to be undertaken to diminish these very unfavorable terms.

    Contact us for a no obligation conversation.  We are not high pressure.  We are here to serve you.

    At CG Financial Consulting we take a look at your investments, insurance and liabilities, and make a comprehensive financial plan to meet your goals and what you want to achieve. There are no yearly fees or percentages that some planners charge. We charge by the hour or by the plan, there is never a conflict of interest.