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We believe every client is unique, with their own needs, circumstances, and priorities. That’s why we take the time to understand you, your family, and your goals to create a customized wealth management plan that meets your every need.

At McClellan Wealth Management, we can also discuss the potential benefits and drawbacks of incorporating annuities into your wealth management plan, as they may be a suitable option for some clients depending on their financial situation and goals.

What Is an Annuity?

The financial instrument known as an annuity offers a steady stream of remittance to someone, typically over a set period. It is often a retirement investment, as it is a valuable source of earnings during retirement.

You can receive this income as a single payment or a series of payments over a set time. Annuities can be a good option for people who want to save for retirement but are not comfortable with the uncertainties of the stock market. Annuities provide financial security and stability because the payments are guaranteed by the insurance company.

Types of Annuities

There are three primary types of annuities: indexed, fixed, and variable. Each category has a different degree of payout and risk.

    • Indexed Annuity: An indexed annuity is linked to how a specific financial index performs, like the S&P 500. An annuity will have value according to the index performance, including the possibility for positive and negative returns. 
    • Fixed Annuity: Fixed annuities let you save money and get a guaranteed income in the future. It works by either making a lump sum payment or a series of payments to an insurance company, which will then provide you with a fixed payment on a predetermined schedule. 
    • Variable Annuity: Variable annuities have a possible high return potential but with greater risks. Unlike a fixed annuity, which provides a guaranteed rate of return, the payments from a variable annuity vary according to the performance of the underlying investments.

Is Investing in Annuities a Good Idea?

Annuities can be a good option for some people depending on their financial goals and circumstances. Annuities are insurance contracts that can provide a guaranteed income stream in retirement, which can be attractive to those who are looking for a stable and predictable source of income. However, they can also be complex financial products with fees and restrictions that may not be suitable for everyone.

It’s important to carefully consider the terms and conditions of any annuity before making a decision and to compare different options to find the one that best meets your needs. A financial advisor can help you evaluate the pros and cons of annuities and other investment options and make a decision that is right for you.

Annuity Takeaways 

Annuities are an option for those looking to supplement their retirement income or protect against the risk of outliving their savings. However, they can also be complex and may involve fees and other charges. So, it is important to understand the terms and conditions of an annuity before making a purchase. They can be a great strategy for wealth management in Birmingham.

Wealth Management With McClellan

At McClellan Wealth Management, we’re dedicated to providing our clients with a personalized experience that empowers them to achieve their financial goals. Contact us today to evaluate your financial situation and see what options may be right for you.



This material is provided as a courtesy and for educational purposes only and is not intended to be relied upon as specific investment advice and is not a recommendation, offer or solicitation to buy or sell any security. The opinions expressed here are those of the author and not Advisor Services Network, LLC.

An indexed annuity is for retirement or other long-term financial needs.  It is intended for a person who has sufficient cash or other liquid assets for living expenses and other unexpected emergencies, such as medical expenses. Guarantees provided by annuities are subject to the financial strength of the issuing company and not guaranteed by any bank or the FDIC.

Indexed annuities do not directly participate in any stock or equity investment.  Clients who purchase indexed annuities are not directly investing in the financial market. Market indices may not include dividends paid on the underlying stocks and therefore may not reflect the total return of the underlying stocks; neither a market index nor any indexed annuity is comparable to a direct investment in the financial markets. 

Variable annuities are offered only by prospectus.  Carefully consider the investment objectives, risks, charges and expenses of variable annuities before investing.  This and other information is contained in each fund’s prospectus, which can be obtained from your investment professional and should be read carefully before investing.  Guarantees are based upon the claims paying ability of the issuer.

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