A deferred annuity is a type of long-term personal retirement account designed to help grow your assets, and provide a steady income stream once you are retired. A deferred annuity has two phases: the savings and investing phase, and the retirement income phase.
All of your earnings grow tax-deferred, which means you don't pay any taxes on your earnings until you withdraw your money, usually at retirement. Amounts withdrawn prior to age 59½ are generally subject to a 10% federal income tax penalty as well as ordinary income taxes.
Getting Started
You can make a single, lump sum contribution and add to it later, or you can make multiple contributions over time.
Savings and Investing Phase
During the saving and investing phase, your assets are invested for potential growth. A fixed deferred annuity generally offers guarantee of principal and an interest rate guaranteed for a set period of time by the issuing insurance company. Variable deferred annuities offer greater growth potential and investment flexibility with a full range of funding choices, often with a fixed rate account option.
Retirement Income Phase
During this phase, you have a choice of how to structure your income payments to complement your other retirement income sources. You can choose systematic withdrawals, take income as you need it, or convert your savings into a series of income payments (called annuitizing your contract). You can elect to receive these payments for a set time period, or choose an income stream guaranteed for life, a feature only available in annuities.
Guaranteed Death Benefit
Most variable deferred annuities provide, prior to annuitizing your contract, a guaranteed death benefit that ensures your beneficiaries will never receive less than the amount you contributed, less withdrawals, even if the markets have declined. Many variable annuities, including New England Financial’s American Forerunner Series, offer a choice of death benefits that can increase over time, based on your contract value. A guaranteed death benefit is one of the insurance benefits annuities can provide.
Types of Deferred Annuities
Fixed Deferred Annuities
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Offer an interest rate guaranteed for a set period of time. Your earnings grow tax-deferred until you begin to withdraw your income. Because your principal and interest rate are guaranteed by the issuing company, it is important to consider a strong, stable company that will be there tomorrow. The company generally resets the interest rate periodically, but guarantees the rate will never fall below a minimum rate stated in your contract.
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You can have a fixed deferred annuity that accepts a single payment or one that accepts multiple payments. Contact your New England Financial representative for information on current fixed annuity choices.
Variable Deferred Annuities
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Offer investment choice and flexibility. Variable annuities offer a range of funding choices, that in turn invest in things such as stocks and bonds, which may provide higher returns than a fixed rate account, but the returns are not guaranteed. The amounts allocated to the variable funding options of your account balance are subject to market fluctuations so that, when withdrawn or surrendered, it may be worth more or less than its original value. Many variable annuities also offer a fixed rate account. All of your earnings grow tax-deferred until you withdraw them.
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You have the flexibility to transfer among the funding option choices within the variable annuity tax-free and often can take advantage of dollar cost averaging*, automatic rebalancing of your account, and other investment strategies.
* Dollar cost averaging does not ensure a profit or protect against loss in a declining market. For the strategy to be effective, you must continue to purchase shares in both up and down markets.
Variable annuities are offered by prospectus only, which is available from your registered representative. You should carefully consider the product’s features, risks, charges and expenses, and the investment objectives, risks and policies of the underlying portfolios, as well as other information about the underlying funding options. This and other information is available in the prospectus, which you should read carefully before investing. Product availability and features may vary by state and issue ages. All product guarantees are based on the financial strength and claims-paying ability of the issuing insurance company, New England Life Insurance Company.
Please click here for an American Forerunner Series prospectus and Annual and Semiannual Reports.
For more information about deferred annuities, contact your New England Financial representative. American Forerunner Series Variable Annuity is issued by New England Life Insurance Company (NELICO), 501 Boylston Street, Boston, MA 02116. New England Financial is the service mark for New England Life Insurance Company, Securities products offered through New England Securities (NES) a broker/dealer ((member FINRA/SIPC). NELICO and NES are affiliates.
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The purpose of Preference Flex Select is very simple: to help you save for retirement and provide an option to receive guaranteed income during retirement. This flexible premium deferred fixed annuity is designed for long-term retirement savings.
American Forerunner Series (AFS) is a tax-deferred variable annuity that can help you accumulate wealth, provide income during retirement, and protect your wealth for your beneficiaries.
Asset Allocation
Asset Allocation is a disciplined, long-term financial strategy for investing money into various asset classes based on your investment goals, time horizon, and risk tolerance. American Forerunner Series Prospectus
The American Forerunner Series Variable Annuity Prospectus is in a file format called PDF (Adobe?s Portable Document Format).
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