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Annuities Can Ease Retirement Planning in Tough Economy

Insurance & Consumer Tips
As the stock, real estate and commodities markets continue to take investors on a  rollercoaster ride, people planning for retirement may want to consider purchasing annuities, according to life insurance specialists at the Automobile Club of Southern California . 
“Annuities can provide a person’s retirement portfolio with a steady stream of income,” said Kent Livesay, vice president of Life Insurance for the Auto Club. “Stock market investors and 401K plan participants that invest in the stock market most likely saw a decline in value over the past few years due to the declining economy, yet those who invested in fixed annuities most likely saw their holdings remain steady.”
An annuity is a contract between an investor and a life insurance company.  Unlike a life insurance policy, which pays beneficiaries a sum following a death, an annuity pays the investor.  “You make a series of premium payments or a single large premium payment to the life insurance company. In return, the company agrees to make regular payments to you starting at an agreed date,” added Livesay.  “Annuities can benefit people by providing competitive interest rates as well as tax advantages.” 
“Fixed annuities can be purchased by using assets in existing 401K accounts or IRAs – especially at retirement when a more conservative investment mix may be more appropriate,” said Livesay.
Simply, there are two types of annuities – fixed and variable. With a fixed annuity, the insurance company pays a guaranteed rate of interest on contributions plus guaranteed regular payment when distribution begins.  By contrast, a variable annuity may be tied to a number of investment products, such as mutual funds or stocks.  The rate of return on premiums and the amount of money received at distribution depends on how well the investments performed.  Due to the potential volatility of variable annuities, some insurance companies such as AAA Life Insurance Company elect to offer only annuities with a fixed interest rate.
Since the Auto Club started offering fixed annuities from AAA Life Insurance Company in 1997, members have purchased more than $600 million in annuities.  “We’ve seen a big increase in interest for annuities from our members since 2008,” notes Livesay.  “With the stock market and other investments experiencing volatility in recent years, people are looking for more stable returns.”
Livesay also reminds potential annuity purchasers to review the fees that may be charged by an insurance company for an annuity and understand the potential penalties that may be incurred for early withdrawal. To learn more about annuities, contact your life insurance agent, or go to 
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The Automobile Club of Southern California acts as an authorized agent for AAA Life Insurance Company. Auto Club CA Dept. of Insurance License #0003259.  Annuities are provided by AAA Life Insurance Company, Livonia, MI.  AAA Life CA Certificate of Authority #07861.  AAA Life and its agents do not provide legal or tax advice.  Therefore, you may wish to seek independent legal, tax, or financial advice to see if annuities are right for you.
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The Automobile Club of Southern California is a member club affiliated with the American Automobile Association (AAA) national federation and serves members in the following California counties: Inyo, Imperial, Kern, Los Angeles, Mono, Orange, Riverside, San Bernardino, San Diego, San Luis Obispo, Santa Barbara, Tulare, and Ventura.