Annuities

Creating a Reliable, Pension-Like Income Stream for Your Retirement

One of the greatest financial challenges facing retirees today is the risk of outliving their savings. As traditional pensions become increasingly rare, people are searching for ways to create a reliable and predictable income stream that they cannot outlive. This is where an annuity can play a powerful role in a well-balanced retirement plan.

At Fargo Life Group, Mark Wagner serves as an educator, helping clients in the Fargo community understand how annuities work and whether one is an appropriate tool for their financial goals. An annuity is a long-term contract with an insurance company designed to provide guaranteed income in retirement. In its simplest form, you give the insurance company a sum of money (either in a lump sum or over time), and in return, they promise to pay you a steady stream of income for a specified period or, more commonly, for the rest of your life.

The Primary Goal of an Annuity: Income You Can Count On

Think of an annuity as a way to create your own personal pension. It’s not primarily a tool for high-growth investment; it’s a tool for income security and longevity protection. It answers the critical retirement question: “How can I make sure my money lasts as long as I do?”

Annuities can be particularly valuable for Fargo residents who want to:

• Supplement Social Security and other retirement income sources.
• Cover essential living expenses (housing, food, healthcare) with a guaranteed income stream.
• Reduce their exposure to stock market volatility in retirement.
• Create a predictable “paycheck” that brings peace of mind and allows them to enjoy their retirement without constantly worrying about their portfolio’s performance.

Navigating the Different Types of Annuities

The world of annuities can be complex, which is why working with a knowledgeable guide like Mark Wagner is so important. We help you understand the main types:

1. Fixed Annuities: Simplicity and Safety
   A fixed annuity is the most straightforward type. It functions much like a Certificate of Deposit (CD), offering a guaranteed, fixed interest rate for a specific term. Your principal is protected, and your growth is predictable and tax-deferred.

• Best For: Conservative investors who prioritize safety of principal and a guaranteed return over the potential for higher growth. It’s an excellent tool for protecting a portion of your retirement savings from market risk.

2. Variable Annuities: Potential for Higher Growth
   A variable annuity allows you to invest your premium into a selection of “sub-accounts,” which are similar to mutual funds. The value of your annuity and the potential income it can generate will fluctuate based on the performance of these underlying investments.

• Best For: Investors with a higher risk tolerance and a longer time horizon who are seeking market-like returns within a tax-deferred annuity structure. They often come with optional riders that can provide guaranteed lifetime income, even if the account value declines.

3. Fixed-Indexed Annuities: A Hybrid Approach
   Fixed-Indexed Annuities (FIAs) offer a unique blend of safety and growth potential. Your returns are linked to the performance of a market index, like the S&P 500. When the index goes up, you participate in a portion of the gains (often up to a cap or spread). When the index goes down, your principal and previously credited interest are protected—you simply earn zero for that period.

• Best For: Individuals who are “cautiously optimistic.” They want the opportunity for better-than-fixed-rate returns but are not willing to risk losing their principal in a market downturn.

Immediate vs. Deferred Annuities

• Immediate Annuity: You fund it with a single lump sum and begin receiving income payments right away (typically within one year). This is for people who are at or near retirement and need immediate income.
• Deferred Annuity: You fund it with a lump sum or multiple payments and let it grow tax-deferred for a number of years before turning on the income stream. This is for people who are still in their accumulation years, planning for future retirement income.

Our Educational and Unbiased Approach

Annuities are not right for everyone, and they should only ever be one part of a diversified financial plan. At Fargo Life Group, our process is built on education, not sales. Mark Wagner will:

1. Analyze Your Full Financial Picture: We review your total assets, income needs, risk tolerance, and retirement goals.
2. Explain the Pros and Cons: We provide a transparent look at how an annuity might fit, including its benefits, costs, surrender charges, and limitations.
3. Model Your Retirement Income: We can show you how incorporating an annuity might impact the stability and longevity of your retirement income plan.
4. Provide Independent Recommendations: We work with numerous top-rated insurance carriers to find the most suitable and competitive annuity products if one is determined to be a good fit for you.

Create a retirement with more certainty and less worry. Contact Fargo Life Group today to learn more about how an annuity can help you secure a predictable income for life.