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Generating Retirement Income with Variable Annuities
Why would I Want a Variable Annuity?
A variable annuity is great for people who:
- Are saving for the long term, and looking for tax-deferred growth
- Like the idea of being fully invested in the market and want to be able to control where and how their money is invested.
- Understand that the market goes up and the market goes down, but their desire to enjoy the unlimited “upside” potential of the market means they’re also OK with the possibility that their account will go down along with the market as well.
A variable annuity is one type of annuity that’s different from the index or fixed type Of annuity. A variable annuity comes with a menu of professionally managed investment options in which to allocate your annuity investment. Most variable annuities offer a wide range of investment options to suit your tolerance for risk, from conservative to aggressive. Variable annuities even offer a “fixed” option for investors who want to keep a portion of their annuity investment earning a fixed rate of interest.
The ING family of companies’ variable annuities offer a large menu of professionally managed investment options from some of the industry’s most well-known investment managers. With the help of your financial professional, you decide which investment options you want to invest in and how your investment is divided between those options.
You should consider the investment objectives, risks and charges, and expenses of the variable annuity and its underlying investment options carefully before investing. The prospectuses for the variable annuity and underlying investment options contain this and other information. You may obtain free prospectuses by calling your financial professional or by clicking the links to the right. Please read the prospectuses carefully before investing.
More Good News
While your money is in the variable annuity, your earnings grow tax-deferred, meaning you will not pay income taxes on that growth until it’s withdrawn from the annuity.
Here’s the best part: Because you’re not paying current income taxes on those earnings…your annuity can grow faster because the money that may have had to be withdrawn from the annuity to pay income taxes can stay in the annuity and continue to grow.
OK...what’s the catch?
It’s important to remember that an annuity is for long term retirement investing. If you need money from your annuity in the early years of your contract, there may be a surrender charge (see the terms of your specific annuity contract) in addition to a 10% penalty tax if you take withdrawals before the age of 59 ½.
(There are exceptions to this rule that your financial professional can tell you about)
How and when would you like to begin withdrawing from your variable annuity?
There are many income and withdrawal options on annuities:
When you’re ready to start receiving income from your annuity, some of your options may be:
- Take random “lump sum” withdrawals (subject to the terms of your annuity contract)
- Set up systematic withdrawals. You tell the annuity company how much income you want and how often, when to start the withdrawals and when to stop.
- Annuitize the contract and choose an income option.
If you die before you annuitize your contract, your annuity will pass to your beneficiari(es) without the cost and delay of probate.
If you’ve already annuitized your contract, the income option you chose when you annuitized will determine how much money goes to your beneficiari(es).
Let’s Recap
If you’re an investor with an interest in participating in the market through its ups and downs, for the long term, then a variable annuity may be right for you.
With the help of your financial professional, you decide where your money’s invested, and any earnings are tax-deferred
You may get to benefit from “upside” growth if the market goes up. However, you understand your account value may go down with the market as well.
You have various options on when and how you take income from your annuity.
Variable annuities are issued by ING USA Annuity and Life Insurance Company and distributed by Directed Services, Inc., member NASD. Both companies are members of the ING family of companies.
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