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Understanding Annuities

Understanding Annuities: Your Guide to Secure Retirement Income

Exploring the Basics of Annuities

In the realm of financial planning and retirement preparation, annuities play a pivotal role in providing a steady stream of income during retirement years. At Schaum Wealth Management, we believe in empowering our clients with comprehensive knowledge about financial instruments like annuities. Let’s delve into the fundamentals of annuities to demystify this important aspect of retirement planning.

  1. Defining Annuities

An Overview of Annuity Contracts:

  • Annuities Defined: An annuity is a financial product offered by insurance companies that provides regular payments to an individual over a specified period, typically during retirement. It serves as a tool for converting a lump sum of money into a guaranteed stream of income, offering financial security and peace of mind in retirement.
  • Types of Annuities: Annuities come in various forms, including fixed annuities, variable annuities, and indexed annuities. Each type offers distinct features and benefits, catering to different risk tolerances and financial objectives.
  1. Key Features and Benefits

Understanding the Advantages of Annuities:

  • Lifetime Income: One of the primary benefits of annuities is the ability to receive a guaranteed income stream for life, providing retirees with financial stability and predictability in their golden years.
  • Tax-Deferred Growth: Annuities offer tax-deferred growth, allowing your investment to grow without being taxed until you withdraw funds. This can potentially enhance the growth of your retirement savings over time.
  • Flexibility and Customization: Annuities can be tailored to meet your specific needs and preferences, with options to choose between immediate or deferred annuities, fixed or variable interest rates, and various payout options.
  1. Considerations and Risks

Evaluating the Factors to Keep in Mind:

  • Fees and Expenses: It’s essential to understand the fees and expenses associated with annuities, including administrative fees, mortality and expense charges, and surrender charges. Assessing these costs can help you determine the overall value proposition of the annuity.
  • Market Risk: While fixed annuities offer a guaranteed rate of return, variable annuities are subject to market fluctuations, presenting investment risk. It’s crucial to carefully evaluate your risk tolerance and investment objectives before choosing an annuity type.

Partner with Schaum Wealth Management for Professional Annuity Guidance

  1. Experienced Financial Advisors

With our team of experienced financial advisors at Schaum Wealth Management, you can feel confident that you’ll receive professional guidance and personalized recommendations tailored to your unique financial situation and retirement goals.

  1. Comprehensive Retirement Planning

We specialize in comprehensive retirement planning, including annuity strategies designed to optimize your retirement income, minimize taxes, and maximize your financial security in retirement.

Contact Schaum Wealth Management Today

Schedule a Consultation

Ready to explore the potential benefits of annuities and incorporate them into your retirement plan? Contact Schaum Wealth Management in Delray Beach today at 561.212.0075 to schedule a consultation with one of our knowledgeable financial advisors. Let us help you navigate the complexities of annuities and chart a course toward a secure and fulfilling retirement.


The guarantee of an annuity is backed by the claims paying ability of the issuing insurance company.

Although it is possible to have guaranteed income for life with a fixed annuity, there is no assurance that this income will keep up with inflation. There is a surrender charge imposed generally during the first 5 to 7 years or during the rate guarantee period.

Index annuities are insurance contracts that, depending on the contract, may offer a guaranteed annual interest rate and some participation growth, if any, of a stock market index. Such contracts have substantial variation in terms, costs of guarantees and features and may cap participation or returns in significant ways. Investors are cautioned to carefully review an index annuity for its features, costs, risks and how the variables are calculated.

There is a surrender charge imposed generally during the first 5 to 7 years that you own a variable annuity contract. Withdrawals prior to age 59½ may result in a 10% IRS tax penalty, in addition to any ordinary income tax. Investment sub-account values will fluctuate with changes in market conditions. An investment in a variable annuity involves investment risk, including possible loss of principal. Variable annuities are designed for long-term investing. The contract, when redeemed, may be worth more or less than the total amount invested. Variable annuities are subject to insurance-related charges including mortality and expense charges, administrative fees, and the expenses associated with the underlying sub-accounts. Investors should consider the investment objectives, risks and charges and expenses of the variable annuity carefully before investing. The prospectus contains this and other information about the variable annuity. Contact your financial professional to obtain a prospectus, which should be read carefully before investing or sending money.

For a comprehensive review of your personal situation, always consult with a tax or legal advisor. Neither Cetera Advisor Networks LLC nor any of its representatives may give legal or tax advice.

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