Create an Income Stream
Taking initial withdrawals of 4% or considering annuities are often recommended to retirees.
During the accumulation period of a fixed annuity, your money (minus any applicable charges) earns interest at certain rates. These rates are set by the insurance company or in a way spelled out in the annuity contract.
The insurance company guarantees that it will pay no less than a minimum rate of interest.
Fixed annuities earn a guaranteed rate of interest for a specific time period: such as one, three, or five years. Once the guarantee period is over, a new interest rate is set for the next period.
This guarantee of both interest and principal makes fixed annuities similar to certificates of deposit (CDs) from a bank.
However, annuities aren’t insured by the Federal Deposit Insurance Corporation (FDIC).
An annuity’s security is related to the financial health of the insurance company that issues the annuity.
During the payout period, the amount of each income payment to you is generally set when the payments start and will not change.
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