Annuities and the Power of Tax Deferral Retirement Savings

Time To Talk Insurance

This months Topic: Annuities and the Power of Tax Deferral Retirement Savings

      Millions of Americans have lost a significant portion of their retirement assets, and many of these individuals may have to delay their planned retirements due to the recent global financial economic crisis, wide spread unemployment, and inflation all having negative impacts on retirement earnings. If the Federal Government continues to borrow money at an attempt to fix these problems the current financial crisis could get even worse.    

      What if the same financial scenario occurred today as it did in the stock market crash of 1929? Would your retirement money still have any value if invested in a Bank CD or Mutual Fund? Today, the financial strength of most banks is tied to the stock market, risky mortgage exposures, and the Federal Governments promise to insure your investment money through the bankrupt FDIC. During the stock market crash of 1929 the only financial industry still paying dividends were conservative and financially stable insurance companies.

      There is a way to invest your hard earned money and receive a guaranteed rate of return on your retirement money without the risk of losing your principal or interest. The investment is called a Deferred Annuity. During the recent stock market crash of 2008 at month when the stock market was at its lowest Auto-Owners Insurance Company increased the rate of return on their deferred annuity. “We made our clients money”      

      With a deferred annuity taxes will have to be paid on gains eventually, but a larger nest egg will have been built in the meantime. “Tax deferral puts my clients in control, allowing them to choose when to pay those taxes.” Taxes are paid every year on a bank CD, with an Annuity taxes are paid only when the money is withdrawn allowing for compounding interest and tax free growth.

      For example, if $100,000 is invested in a three-year CD that is currently offering 4.4%, the money would grow to $104,400 at the end of the first year, and may be subject to annual income taxes, further reducing gains. Assuming a 28% tax bracket, 6.6% would need to be earned from the CD in order to actually return 4.4% once taxes are figured in. After calculating the $1,232 (28% tax bracket) in taxes on the gain just in the first year the total return on your investment is actually $3,168 instead of $4,400. A bank CD reduces the total gains on your investment year after year and does not have an investment choice to defer the taxes at a later time. After three years the bank CD’s true value is $109,504. Now let’s take a look at the deferred annuity…  

      However, if the same $100,000 were put into a three-year Annuity paying 4.4% it would grow to $104,400 at the end of the first year, and $113,789 at the end of the third year. That’s tax-deferred savings, compounded growth, and flexible access to your money along the way.

You decide: Bank CD $109,504 VS. Annuity $113,789

     

      Our goal is to provide the consumer an investment choice that is Safe, Sound, and Secure thru the financial strength of Auto-Owners Insurance Company. Auto-Owners Insurance Company was years ago and is rated very highly by the top financial professionals in the industry: Thestreet.com rates Auto-Owners as one of the 20 best annuity companies, Consumer Reports highest rated company pick, J.D. Power and Associates awarded Auto-Owners their top award 2 years in a row; highest A.M. Best rating of A++ only 10 insurance companies have this high of a rating, and they are a Fortune 500 Company. The Safe, Sound, and Secure investment approach is an annuity for all individuals and businesses seeking a guaranteed rate of return with no fess or the risk of losing any of your hard earned money.  

      Because I am an independent insurance agent I have the flexibility of providing state of the art insurance products thru many of the top rated insurance companies to the people of Southern Ohio. Please stop by my office or call me at 740-286-5031 and I will be happy to explain the benefits of investing in an annuity and allowing your money to work hard for you.

Michael Carlisle, Insurance Agent