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We are here to help you grasp the benefits of annuities.

In the December 10, 2012 issue of Forbes magazine William Baldwin, investment strategies editor, offered age tailored ideas to help readers make the most of Pres. Obama’s second term. He advised those 55 and over to purchase deferred annuities.

Certain types of deferred annuities are excellent low risk vehicles to keep and grow your money.

Certain types of deferred annuities are excellent low risk vehicles to keep and grow your money.

Fixed annuities can be configured to provide a respectable rate of return using a predetermined interest rate. The interest rate may be reset annually, or may be guaranteed to remain the same for multiple years.

Indexed fixed annuities tie the rate of return to your choice of a number of different indexes, including the Dow-Jones, and the S&P 500. You gain if the markets are up, but you don’t risk losing principal and interest if the markets are down. Accumulations within deferred annuities grow tax deferred (no 1099’s) and are not taxed until funds are withdrawn. The IRS imposes a penalty, however, if withdrawals are made prior to age 59½. These vehicles are designed for the long term and generally apply surrender charges if the annuity is surrendered prior to a specified length time (usually 5 to 10 years). Most companies, however, will allow some surrender free withdrawals during the surrender period.

Both types of fixed annuities can be configured to allow for a lump sum distribution at the end of the surrender period. They can also be configured to pay out over a specified number of years or provide a guaranteed lifetime income.

Variable annuities are generally funded with mutual funds and are subject to increase or loss of principal, depending on the movement of the markets. Life Solutions, P.A. does not market variable annuities.

Immediate annuities are funded with a lump sum of money and provide for immediate distribution, usually within 30 days of the effective date of the annuity. An immediate annuity can be configured to provide a guaranteed income for a specified period of years or for a lifetime.