Reach out to Relayer Benefits Group. You can learn about your options at an educational event or by scheduling a one-on-one consultation with us.

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How Annuities Work

With lots of retirement options out there, you may be wondering how annuities work. Annuities, in general, come in three main varieties. These include fixed annuities, variable annuities, and fixed index annuities (FIAs). Since our firm is focused on helping you keep your money safe when planning for retirement, we only recommend FIAs and fixed annuities. FIAs have some additional benefits over fixed annuities, such as the ability to get a higher rate of return. Also, FIAs can offer some other optional features as well. However, in some situations, clients still prefer a fixed annuity. In either case, we can help you learn your options.


FIAs can give retirees a high level of protection for their income. During the accumulation phase of your annuity, your principal and any credited interest are safe. Then, when you begin withdrawing income from it, you still have principal protection. With an FIA, you will not outlive your money. In addition, and FIA could provide a death benefit to your loved ones. In fact, if you pass away before your withdrawal period, your beneficiaries may be able to get the payments instead.



An insurance company contracts with you to provide an FIA. Essentially, they promise to keep your money safe from market losses. In return, you agree to let the money grow for a set period of time before taking an income on it. The amount of your payment will depend on several factors. For example, how much money did you place in the annuity? Also, did you select any additional benefits from the policy? Different contractual factors will determine how annuities work for you. Also, an FIA income may be taken annually or might be split into monthly payments. Be sure to learn about the choices available to you.

How Annuities Work: Phases of An FIA

When it comes to planning for retirement, you need solid advice from someone you trust. We don’t try to “sell” our clients. Instead, we present a clear approach of safety, simplicity, and a reasonable rate of return over time. If the strategy makes sense for you and your goals, we help you get started. If not, we are clear about that, too. Not every retirement situation is the same. Therefore, meeting with someone who takes an individualized approach is important. What we do, we do well. If you also are looking for protection of your wealth in retirement, we can help.


So, we present many opportunities for you to learn more about your options. For example, we offer webinars and seminars on “Retirement Strategies,” There are two main time periods associated with an FIA. These are accumulation and distribution. First, your money accumulates. During this phase, you agree to give the money time to accumulate interest. Next comes the potential withdrawal phase. In this timeframe, you can begin to take an income. With its claims-paying ability backing it, the insurance company commits to a certain minimum interest rate.

Because an FIA is not invested directly in the market, it isn’t negatively affected when the market goes down. Instead, your FIA follows an index or multiple indexes. When they have an upturn, your interest rate may rise as well. This gives you indexed interest potential on your money. However, you won’t lose your principal if the market does go down. Also, it is possible to select a fixed interest rate on your annuity, depending on the product you choose.

“Tax-Free Income”, and “Protecting Your Wealth.” At our no-obligation seminars, participants enjoy a meal, have some fun, and gain important insights into their financial future. The more you know, the better decisions you can make. Join us at an upcoming event to grant yourself the power of knowledge.

senior couple in fall jackets walking and smiling together what is an annuity portsmouth nh

Annuity earnings are tax-deferred until you withdraw money. So, your total earnings may increase due to the power of compound interest. Also, your income may go up as a result of compounding interest as well. Of course, there are other retirement options that offer tax-deferment, but FIAs offer some additional benefits. For example, FIAs do not cap how much money you can put in them. Unlike 401(k)s and IRAs, FIAs are not subject to the same restrictions. An FIA is an insurance product and this changes how annuities work in regard to tax issues.

Another important point: annuities provide a death benefit without probate. This may help you feel confident about your strategy when planning for retirement.

Usually, you have choices when it comes to the index(es) for your annuity. Also, other factors may have options to review as well. These include cap amounts, participation rates, the spread, and crediting method. These are all ways in which the annuity provider figures out your rate of return and sets up the details for your FIA or fixed annuity.

FIAs can offer other protections as well. For example, an income rider may be a way to raise your income as costs go up. In addition, you can protect those you love with death benefits. Everyone has different goals. Reach out to learn more about options for yours. Or, sign up to learn more at an event. We are here to help you with how annuities work.

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