Waddell & Reed

Annuities

What is an annuity?
An annuity is an investment through which you can receive payments in retirement for as long as you live or for a specific number of years. Annuities enable investments to grow tax deferred until withdrawn. All contributions to an annuity are made on a pre-tax basis.

What kinds of annuities are available?

  • Fixed Immediate
    An annuity that is purchased with a single payment and provides guaranteed payouts right away.
  • Variable Immediate
    An annuity that is purchased with a single payment and provides payouts right away. Payout amounts may vary based on investment performance.
  • Deferred
    A deferred annuity delays income payments until the investor chooses to receive them.
  • Fixed
    A fixed annuity makes steady, predictable payments to the investor for a specific number of years. Payments may not keep pace with inflation.
  • Variable
    A variable annuity provides income payments to the investor that are contingent upon the performance of the underlying investments. Depending on market activity, payments may go up over time, which can help protect against inflation, or they may decrease.

Who should invest in an annuity?
People who want a steady stream of income in retirement may consider investing in an annuity. An annuity can serve as a stand-alone retirement investment vehicle or as a supplement to an existing retirement income source, such as an IRA.

What are the benefits of having an annuity?

  • Money invested in an annuity grows tax deferred. Earnings are taxed at your regular income tax rate at withdrawal.
  • There is no annual contribution limit for annuities, allowing you to invest larger amounts for retirement.
  • Unlike an IRA, you can continue to make contributions past age 70 ½.
  • Unlike an IRA, you are not required to begin distributions at age 70 ½.
  • Should you die during the accumulation phase, your beneficiary will receive at least as much as you originally invested.

Contact your Waddell & Reed financial advisor, or search for an advisor in your area, to discuss your comprehensive financial plan and whether annuities are right for you.

Waddell & Reed offers insurance products through arrangements with outside insurance companies.

You should consider the investment objectives, risks, charges and expenses of an underlying fund and the variable insurance product carefully before investing. The underlying fund prospectuses and variable insurance product prospectuses (available from your financial advisor or applicable insurance company) contain this and other information. Please read the prospectuses carefully before investing.

There are charges and expenses associated with annuities and variable life insurance products, including mortality and expense risk charges, management fees, fund expenses, distribution fees, administrative fees, expenses for optional riders and deferred sales charges for early withdrawals. Withdrawals before age 59 ½ may be subject to an IRS penalty in addition to taxes. Enhanced death benefits and living benefits are offered for an additional cost.

Please remember that an investment in an underlying fund involves risk. Investment return and principal value of an underlying fund investment will fluctuate, and shares, when redeemed, may be worth more or less than their original cost.

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