Annuities: Turning Savings Into Security

An annuity is a financial product designed to help you prepare for retirement by combining tax‑deferred growth with the option to create a steady stream of income later in life. It’s a way to transform your savings into predictable support when you need it most.

You can purchase an annuity with a one‑time payment or contribute through flexible, ongoing premiums. Depending on the type of annuity, you may choose shorter or longer accumulation periods to match your financial goals.

Single Premium Indexed Annuity (SPDA)

A SPDA is funded with a single lump‑sum payment, either directly or through a rollover/transfer. It grows tax‑deferred and is linked to the performance of a market index, offering potential for higher returns while still providing protection against market downturns.

Examples of indexed options include:

• Growth Driver

• Income Driver

• Zenith Growth

• Zenith Income

Flexible Premium Indexed Annuity (FPDA)

An FPDA allows you to make multiple contributions during the accumulation phase. Payments can be made through payroll deductions, bank drafts, transfers, or rollovers. Like the SPDA, growth is tied to an index, giving you the opportunity to build value over time with flexibility in how you fund it.

Examples include:

• Flex Secure Growth

• Flex Secure Growth Bonus

• Flex Select Income

Fixed Flexible Premium Annuity

A Fixed Flexible Premium Annuity is a retirement savings option that combines the security of guaranteed growth with the convenience of making contributions over time. It’s designed for individuals who want predictable returns while maintaining the ability to add funds as their financial situation evolves.

Types of Annuities

Key Features

Multiple Contributions Over Time

Unlike single premium annuities that require one lump‑sum payment, this option allows you to make ongoing contributions during the accumulation period. Payments can be made through payroll deductions, bank drafts, rollovers, or direct deposits—giving you flexibility in how you build your savings.

Guaranteed Interest Rate

Your contributions grow at a fixed, guaranteed rate. This means you don’t have to worry about market fluctuations or losing value. The stability of fixed growth makes it easier to plan for the future with confidence.

Tax‑Deferred Growth

Earnings inside the annuity grow tax‑deferred, allowing your money to compound more efficiently. You won’t pay taxes on the growth until you begin withdrawing funds, which can help maximize long‑term accumulation.

Flexibility for Life Changes

Whether you’re starting small and contributing gradually, or adding larger amounts when possible, this annuity adapts to your financial journey. It’s ideal for individuals who want steady growth but also need the freedom to adjust contributions over time.

Retirement Income Potential

When the accumulation period ends, the annuity can be converted into a stream of income payments. This provides reliable support during retirement, complementing other savings and income sources.

Fixed Single Premium Annuity / Multi‑Year Guaranteed Annuity (MYGA)

A fixed single premium annuity is funded with one payment and grows tax‑deferred at a guaranteed interest rate. A MYGA locks in that rate for a set period (such as three or five years), giving you predictable growth without market risk.

Examples include:

• MYGA

• Green Mountain Freedom 5

• Retiremax Secure

Fixed vs. Indexed Annuities

When planning for retirement, many people look for ways to grow their savings while keeping risk under control. Annuities are designed to provide both protection and growth, but the way they work depends on whether you choose a fixed or indexed option.

Fixed Annuities

A Fixed Annuity offers stability and predictability.

Earn Interest at a Set Rate

Your money grows at a guaranteed interest rate determined by the insurance company. This makes it easy to plan for the future because you know exactly how much your savings will increase.

Guaranteed Minimum Growth

Even if markets fluctuate, your annuity continues to grow at the promised rate. This guarantee provides peace of mind for those who prefer security over risk.

Stability and Predictability

Fixed annuities are ideal for individuals who want consistent, reliable growth without exposure to market ups and downs. They’re often chosen by people who value certainty and want to protect their retirement savings.

Indexed Annuities

An Indexed Annuity offers the potential for higher earnings while still protecting against market losses.

Growth Linked to a Market Index

Your annuity’s cash value is tied to the performance of a market index, such as the S&P® 500. This allows your savings to benefit from market gains without being directly invested in stocks.

No Direct Investment in Stocks or Equities

You’re not buying shares of the index itself. Instead, your annuity credits interest based on how the index performs, giving you exposure to growth without the risks of direct market participation.

Downside Protection Through Minimum Guarantees

Even if the index performs poorly, your annuity includes a guaranteed minimum interest rate. This ensures your cash value won’t decline due to market downturns.

Potential for Higher Earnings

Indexed annuities can outperform fixed annuities in strong market years. However, returns may vary depending on index performance and are often subject to caps or participation rates. This balance of growth potential and protection makes indexed annuities appealing to those who want more opportunity without taking on full market risk.