Annuities

Annuities can be an integral part of your long-term retirement planning strategy to help protect your financial future.

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How does an annuity work?

When you buy an annuity, you contribute money either in a lump-sum payment or through contributions over time. The money you contribute grows tax-deferred, meaning you don’t pay taxes on the earnings until you withdraw them.¹

Once you retire or choose to start receiving income from your annuity, you can annuitize your policy. This means you convert the accumulated value of the annuity into a guaranteed² stream of payments. You can choose if you want the payments to last for a specific period or for the rest of your life.

A couple in their 60s meet with a financial professional to talk about their annuity and how it will create retirement income.

What is an Annuity?

February 8, 2023 | 4 min read

An annuity provides different features that make it a useful retirement planning tool. But what is an annuity and how does it work?

The value of an annuity

If you’re already contributing the maximum amount to other retirement plans, like an IRA or 401(k), an annuity is another way to grow money tax deferred, meaning you don’t pay taxes on the earnings until you withdraw them.¹

Annuities can be a source of income before or during retirement to help meet:

Extra income needs

Fill the gap between early retirement and the beginning of Social Security benefits or provide more money during the early, more active years of retirement.

Retirement needs

Help cover essential expenses in retirement not covered by Social Security, pension plans or personal savings.

Non-retirement needs

Provide reliable, regular income for things like payments for children’s college expenses.

Types of annuities

The type of annuity you choose determines the rate your investment will earn.

Indexed annuities

Issued by Ameritas Life Insurance Corp.

Returns are linked to a market index, like the S&P 500®.

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Variable annuities

Issued by Ameritas Life Insurance Corp. and underwritten by affiliate Ameritas Investment Company, LLC.

Choose investment options managed by respected names in the industry.

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Fixed annuities

Issued by Ameritas Life Insurance Corp. or Ameritas Life Insurance Corp. of New York.

Earn a guaranteed interest rate.

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How do you get an annuity?

One of the best ways to buy an annuity is to work with a financial professional.  The steps you take generally include:

1

Complete the necessary paperwork to apply for the annuity. You’ll need to provide some personal information and make some decisions about structuring your annuity.

2

Make an initial investment, known as the premium, into your annuity. This can be a single lump-sum payment or a series of payments over time.

Once your application and initial investment are received, you’ll receive your policy.

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¹ Withdrawals of policy earnings are taxable and, if taken prior to age 59½, a 10% penalty tax may also apply. The information presented here is not intended as tax or other legal advice. For application of this information to your specific situation, you should consult an attorney.

² Guarantees are based on the claims-paying ability of the issuing company.

STANDARD & POOR’S, S&P and RATINGSDIRECT are registered trademarks of Standard & Poor’s Financial Services LLC.

In approved states, fixed and indexed annuities are issued by Ameritas Life Insurance Corp. In New York, fixed and indexed annuities are issued by Ameritas Life Insurance Corp. of New York. Variable annuities are issued by Ameritas Life Insurance Corp. and underwritten by affiliate Ameritas Investment Company, LLC. Variable annuities are suitable for long-term investing and are subject to investment risk, including possible loss of principal.

Before investing, carefully consider the investment objectives, risks, charges, expenses, and other important information about the Policy issuer and underlying investment options. This information can be found in the Policy and investment option prospectuses. Read the prospectuses carefully before investing.