A Steady Income with Tax-deferred Growth

Have low interest rates and an uncertain economy stopped you from making long-term investments? This reluctance to do anything could come at a cost, such as a reduction of income. Immediate and fixed annuities have often been the investments of choice for people who want steady income and tax-deferred growth. And when used together as a ?split-annuity,? these investments could possibly provide a return that might keep pace with prevailing interest rates while not tying up all of your funds.

An immediate annuity will pay you a predictable amount of money each month for a fixed term (or lifetime). Part of your income would be tax-free since it is a return of your investment. Once you make the investment the funds are generally not accessible. On the other hand, a fixed annuity?s income accumulates tax-deferred. And you can withdraw the earnings and a certain percentage of the principal (depending on the issuing company?s guidelines) each year.
The concept of the split-annuity is that by the time your immediate annuity?s term runs out, and the payments stop, your fixed annuity will have grown enough to replace your original investment. Then you can start the process over again at the current interest rates, which could be higher or lower than your prior investment?s.

The calculation to determine what portion of your split-annuity should go into the immediate annuity will depend on the current interest rates and the number of years for the payouts.

Certified Retirement Financial Advsior graduates have offered to provide no cost illustrations of the split annuity.