Annuities offer you guaranteed income for life—in any market.
Annuities offer you guaranteed income for life—in any market.

Annuities offer you guaranteed income for life—in any market.

SCHWAB UPDATE

NEW YORK STATE COVID-19 INSURANCE AND ANNUITIES UPDATE

A recent Executive Order issued by Governor Cuomo, together with recent amendments to the insurance and banking regulation (the “regulations”) issued by the New York State Department of Financial Services (“Department”), extends grace periods and gives you other rights under your life insurance policy or annuity contract if you can demonstrate financial hardship as a result of the “novel coronavirus” (“COVID-19”) pandemic. These grace periods and rights are currently in effect but are temporary, though they may be extended further.

To learn more, you can view a copy of the Executive Order.

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Annuities are contracts between you and an insurance company that can provide valuable insurance features, while certain types of annuities offer a unique combination of both insurance and investment features. Annuities complement other retirement plans and, depending on what type you select, they may provide guaranteed lifetime income, opportunities for tax-deferred growth, guaranteed yield, market participation, flexible withdrawals, and legacy protection for your beneficiaries. 

Keep in mind that Schwab’s variable annuity fees are 26%—48% below the industry average.¹

Questions about annuities? Contact an annuity specialist at 866-663-5241.

Annuity Video

Understanding Annuities

Opens in popupRead transcript

Retirement is changing, with pensions less common,

and increased market volatility the new normal.

You may ask whether it's still possible to have steady income in retirement that you can't outlive and the comfort that comes with it.

Annuities could be the answer.

There are different types of annuities and like all investments, each comes with its own pros and cons.

When used appropriately, they can be a powerful tool that offers unique benefits that can complement social security and the rest of your income strategy.

In this video, we are going to look at two types of annuities: immediate fixed annuities, sometimes known as income annuities, and deferred variable annuities. We'll give you the straight facts on how they work and what to look out for and then you can talk to your financial consultant to see if they're a good fit for you.

Immediate fixed annuities can be great if you're already retired and looking for immediate, reliable monthly income that won't vary with market fluctuations and doesn't require managing.

Here's how it works: You pay a lump sum, a premium to an insurance company, in exchange for monthly payments to last a specific period, such as 5, 10, 20 years or for the rest of your or your spouse's life.

The insurance company determines that amount of income you receive based on a number of factors, including life expectancy, interest rates, and the distribution options you selected.

You can choose to start receiving payments immediately.

Fixed annuities lock in a fixed payment amount. This provides guaranteed income that doesn't depend on market returns. So, you don't benefit when the market goes up, or lose out if the market drops.

There are some tradeoffs with an immediate fixed annuity. If, for example, while protected from outliving your money, you may not live long enough to recoup your premium. Also, once payments start, you typically cannot terminate the contract for a refund of premium.

Now let's talk about deferred variable annuities. Deferred variable annuities can be a good option if you are nearing retirement. This type of annuity allows you to keep your money working until you need it, with the option to convert it to guaranteed income once you retire.

Here's how it works. You invest an amount choosing from a variety of investment options available within the annuity.

Then, once you're retired, you can convert the value of that portfolio into a stream of lifetime income.

Bear in mind that the performance of the underlying investments you select will determine the overall value of the account that you will be drawing from, which may end up more or less than the amount initially paid into the annuity. If you worry about a big market decline jeopardizing those investments, many annuities also offer a useful option known as a guaranteed lifetime withdrawal benefit rider. For an additional fee, this GLWB rider can help protect your retirement income from downturns in the market, while still allowing you to realize growth if the value of the investments in your annuity increases over time. And provided the amount you withdraw each year is not in excess of the amount allowable by the GLWB rider, the payments can last for life, even if you deplete all of the funds in your annuity.

Variable annuities with GLWB riders are complex, so it's a good idea to talk to a Schwab financial consultant and review the details closely before purchasing. Also, different companies offer different features for both types of annuities. So, do your research to fully understand both the benefits and the risks involved.

Whether you are nearing retirement or already there, annuities can help ensure your savings are built to last. Should annuities be a part of your retirement plan?

Talk to us at a Schwab branch near you or visit Schwab dot com forward slash annuities.

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Understanding Annuities

See how an annuity may fit with your long-term retirement income plan.

Which annuity is right for you?

  • Variable Annuities

  • Fixed Indexed Annuities

  • Single Premium Immediate Annuities

  • Deferred Income Annuities

  • Fixed Deferred Annuities

  • Guaranteed income for life

All guarantees are based on the financial strength and claims-paying ability of the issuing insurance company (not Schwab).

Annuity Frequently Asked Questions

How do annuities work?
What is the difference between fixed, fixed indexed, and variable annuities?
What kinds of annuities does Charles Schwab offer?
When might an annuity be a good option for your situation?
What should I be aware of?
How are annuities taxed?
How do annuities compare to other retirement options?
How might annuities benefit my heirs?
What goes into getting an annuity?

Already own a Schwab annuity?

Before considering an exchange of your current annuity, carefully consider surrender charges on your existing contract, loss of guaranteed benefits, and differences in features, costs, services, and company strength, as well as other factors that could reduce or eliminate the benefit of an exchange.

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