Concerned About Having Enough Money to Retire? New Legislation May Help!

June 14, 2019

Talk with an agent to understand how changes may impact your future and why you should consider an annuity in your financial planning


Legislation introduced in the House of Representatives was recently passed to address the lack of retirement savings among the U.S. workforce targeting needs such as student loan debt and a population that is living longer.

The bill, known as The SECURE Act, would allow more small businesses to help with retirement plans, increase the number of 401(k) plan sponsors that offer annuities as an investment option, enable families to tap into their 529 plans to pay up to $10,000 per year on student loan debt, and other measures to help Americans get on the road to a healthy retirement plan.

What is an annuity?

An annuity is an investment contract between a person and an insurance company that allows for the deposit of money that is managed by the company for the benefit of the investor. In return, the insurer makes payments to the investor over a period of time that is spelled out in the contract. There are several types of annuities (such as fixed or indexed) based on the type of investment involved. The advantages of annuities include tax deferral during accumulation and lifetime retirement income.

Which type of annuity is best for you?

There are several annuity options from which to choose including an immediate or deferred annuity or a fixed or fixed indexed annuity. With an immediate annuity you make a lump sum investment and receive monthly payments almost immediately whereas a deferred annuity regular contributions are made over a period of time to increase the value of the annuity. With both immediate and deferred annuities you have the option of whether you want a fixed or fixed indexed annuity. A fixed annuity carries lower risk however the payout remains the same each month regardless of market conditions. A fixed indexed annuity is a tax-deferred, long-term savings option. This type of annuity offers more growth potential than a fixed annuity.

Before deciding what type of annuity you want to purchase you will need to consider your financial situation and long-term goals. Annuities can serve as a guaranteed complement to other retirement investments you may have. You will also want to consider how the SECURE Act may affect your decisions in this process.

Be sure to speak with a Brooks, Todd & McNeil agent to determine which type of annuity is right for you and your long-term retirement goals.