The National Association for Fixed Annuities designated June as National Annuity Awareness Month in 2010 as part of their goal to educate consumers about the value of annuities as a retirement planning vehicle. We have been utilizing annuities that we call Crash Proof® investment accounts to make up our proprietary Crash Proof Retirement® System since its inception. These annuities are classified as Crash Proof® investment accounts because of their unique properties that make them perfectly suited for retirees who want to have a lifetime of guaranteed income.
Annuities can be a valuable retirement planning tool, but not every annuity is suitable for those in or near retirement. Many investors have been told to avoid annuities because of their complexity and fees that come attached to certain types of contracts. At Crash Proof Retirement®, we work to dispel the myths about annuities by going above and beyond to educate investors and provide truth, transparency, and clarity about these often misunderstood investment vehicles.
Here is more information about annuities and how you can use them as a powerful tool to ensure a secure financial future in retirement:
What Are Annuities?
An annuity is defined as, “a sum of money payable yearly or at other regular intervals.” When purchasing an annuity, an investor can choose to receive regular income payments in exchange for a lump sum or series of payments. Depending on the type of contract, an investor can begin receiving payments immediately, or they can begin at some point in the future.
Unlike risky, securities-based investments like stocks, bonds, and mutual funds, annuities are based in the financial life insurance industry. As such, they are proven to be much safer than vehicles based in the securities industry. That’s because life insurance companies are much more heavily regulated to protect consumers. Should any financial life insurance company become insolvent, other financial life insurance institutions come together to keep the consumer whole. This process known as receivership means the consumer’s money is backed and guaranteed by the entire financial life insurance industry, and it’s the reason why the annuities we utilize are the only vehicles that can be called Crash Proof investment accounts.
Different Types of Annuities
- Immediate Deferred – With an immediate annuity, you can begin receiving payments right away. Deferred annuities, on the other hand, will grow for a period of time before payments begin. The length of this period depends on the terms outlined in the contract.
- Fixed Annuities – These contracts credit interest at a fixed rate. Payments can begin immediately, or they can begin after an accumulation phase that allows the contract to grow before disbursements begin.
- Fixed Index Annuities – Instead of crediting interest at a fixed rate, the rate of return for indexed annuities is tied to the performance of a stock market index like the S&P 500. As a result, these vehicles are capable of crediting interest at a higher rate than fixed annuities. A 2009 study performed at the nation’s top business school, The Wharton School of Business, proved the earning potential of these vehicles stating, “Since their inception in 1995, FIAs have outperformed corporate and government bonds, equity mutual funds, and money markets in any combination, not just one year, but every year through the study’s completion (Which includes enduring the market crashes of 2001 and 2008).” Although the performance of an indexed annuity is tied to stock market performance, these contracts also contain an important feature that protects you from losing your principal during a stock market crash. Fixed index annuities credit interest periodically, and once that interest is credited, it is included in the principal amount and cannot be lost no matter what happens with the stock market.
- Variable Annuities – The rate of return for a variable annuity is tied to the performance of a portfolio of mutual funds chosen by the investor. Because they can fluctuate with the stock market, come with ongoing fees, and do not protect you from losing your principal, we consider variable annuities the worst investment in the history of the world, and not a suitable investment vehicle for anyone in or near retirement. Crash Proof Retirement® does not sell nor recommend securities and as a result is not licensed to sell securities, so we do not include any variable annuities in the Crash Proof Retirement® System.
Annuities and the Crash Proof Retirement® System
Our team scoured thousands of annuities and hand selected only the most consumer driven vehicles. To be considered a Crash Proof® investment account for use in our Proprietary Crash Proof Retirement® System, an annuity must share some common features:
- No up-front or ongoing fees
- Protection of principal – when the stock market fluctuates, you will never lose a penny of your principal investment.
- Tax Deferred growth – These Crash Proof® investment accounts credit interest each year that is tax deferred, meaning you don’t pay taxes until you withdraw your money.
- Guaranteed Income and Liquidity options – many annuities offer a feature that allows you to withdraw a portion of your contract’s value every year with no tax This allows you to increase your income to keep up with inflation or anything else that may come up, without depleting your nest egg.
When you utilize the annuities known as Crash Proof® investment accounts to save for retirement, you will never have to worry about fees or lack of liquidity. You can also have peace of mind knowing that you will never lose money from your nest egg during a stock market crash.
Here are two Crash Proof® consumers, Ed and Lynn Bonner of Sicklerville, NJ, describing how they have been able to plan a worry-free retirement with the Crash Proof Retirement® System. They are just two of the thousands of retirees who have used our system and its annuity component to achieve their retirement goals:
If you want to learn more about annuities known as Crash Proof® investment accounts and how they can fit into your retirement plan in Bucks County and communities across the country, get in touch with Crash Proof Retirement® right away. Call 1-800-722-9728 or visit our events page to reserve your seat at our upcoming screening of “The Baby Boomer Dilemma”, an important film by award-winning director Doug Orchard that outlines the difficulties faced by today’s retirees and talks about safe investments like annuities that can provide them with a sense of certainty about their retirement futures.