Did you know that an annuity is a contract between you and an insurance company, under which you make a lump-sum payment or series of payments? In return, the insurer agrees to make periodic payments to you beginning immediately or at some future date. Annuities typically offer tax-deferred earning and may include a death benefit that will pay your beneficiary a guaranteed* minimum amount, such as your total purchase payments.

Unlike retirement plans, there is no limit to how much money you can put into an annuity! The number of annuity products on the market today can make selecting the most suitable annuity a confusing process.

Some Facts to Consider:

• Timing of payout – immediate or deferred: In an immediate annuity, the annuitant (you) begins receiving payments immediately after purchase. This is for individuals who need immediate income from their annuity. In a deferred annuity, payments begin at some future date, usually at retirement.
• Investments by Insurers – fixed or variable: Insurance companies invest annuity assets in government securities and high-grade corporate bonds. They offer a guaranteed* rate, typically over a period of one to ten years. Variable annuities provide you more control over where your premium goes, such as securities portfolios, fixed interest accounts, and money market securities.
• Liquidity options – An annuity may allow you to withdraw either your interest earnings or up to 15% per year without a penalty (although any withdrawal from an annuity may be subject to taxes and a 10% federal penalty if taken before age 59 1/2).

Types of Annuities

• Fixed annuity: The insurance company guarantees that you will earn a minimum rate of interest during the accumulation phase of the annuity. Plus, it guarantees that the periodic payments will be a set amount. These periodic payments may last for a definite period, such as 20 years, or an indefinite period, such as your lifetime or the lifetime of you and your spouse. Fixed annuities are not securities and are not regulated by the SEC.
• Variable annuity: Provides purchaser more choice as to where their premium goes through a selection of sub-accounts, similar to mutual funds. The rate of return on your purchase payments, and the amount of the periodic payments you will eventually receive, vary depending on the performance of the sub-accounts you selected. Variable annuities are securities regulated by the SEC. 
• Equity-indexed annuity is a "hybrid" type of annuity. During the accumulation period – when you make either a lump sum payment or a series of payments – the insurance company credits you with a return that is based on changes in an equity index, such as the S&P 500 Composite Stock Price Index. (An annuity’s index account does not credit the same return or a percentage of the return of any index. Dow Jones indices do not include the dividend income of the company stocks that comprise it.) The insurance company typically guarantees a minimum return. After the accumulation period, the insurance company will make periodic payments to you under the terms of your contract, unless you choose to receive a lump sum. Depending on the mix of features, an equity-indexed annuity may or may not be a security. The typical equity-indexed annuity is not registered with the SEC.

Before You Decide:

If you are considering purchasing an annuity call us to discuss the following:

• The rating of the insurance company (indicating their financial strength) issuing the annuity, particularly in the case of a fixed annuity.
• Understand the fees you will pay.
• Understand that if you are considering a withdrawal from an annuity it may be subject to taxes and a 10% federal penalty if taken prior to 59 1/2 years of age

For additional information about annuities you can visit www.sec.gov/answers/annuity.htm  (If you cannot access this information online, contact us to request a copy.)

For more Estate Planning information, visit http://www.dlamm.com/

* Annuity guarantees rely on the financial stability and claims paying ability of the issuing insurance company.

Your Social Security benefits are the foundation on which you can build a secure retirement. The three major elements of your retirement portfolio are:

• Benefits from pensions,
• Savings and investments, and
• Social Security benefits.

Most financial advisors say you'll need about 70% of your pre-retirement earnings to comfortably maintain your pre-retirement standard of living. If you have average earnings, your Social Security retirement benefits will replace only about 40%. The percentage is lower for people in the upper income brackets and higher for people with low incomes. You'll need to supplement your benefits with a pension, savings or investments.

To help you plan for retirement, the Social Security website includes a Retirement Estimator that lets you get a retirement benefit estimate based on current law and real time access to your earnings record. It also provide a Benefits Planner to help in the event of disability or loss of your family's wage earner.

Factors that may affect your retirement benefits

Your benefit amount is based on your earnings averaged over most of your working career. Higher lifetime earnings result in higher benefits. If you have some years of no earnings or low earnings, your benefit amount may be lower than if you had worked steadily.

Your benefit amount also is affected by your age at the time you start receiving benefits. If you start your retirement benefits at age 62 (the earliest possible retirement age) your benefit will be lower than if you wait until your full retirement age. If you start your retirement benefits after full retirement age, the monthly benefit may be higher due to delayed retirement credits.

If you are self-employed

Self-employed people must report their earnings and pay the taxes directly to the IRS. You are self-employed if you operate a trade, business or profession, either by yourself or as a partner.

You report your earnings for Social Security when you file your federal income tax return. If your net earnings are $400 or more in a year, you must report your earnings on IRS Schedule SE for Social Security purposes, in addition to the other tax forms you must file.

If you work for a federal, state or local government

If you work for a federal, state or local government where you do not pay Social Security taxes, the pension you receive from that agency may reduce any Social Security benefits for which you are qualified. There are two factors that may reduce your benefits.

• The first factor affects the way your Social Security retirement or disability benefits are figured. The Windfall Elimination Provision fact sheet provides answers to questions you may have about this provision.
• The second factor affects Social Security benefits you receive as a spouse or widow/widower. The Government Pension Offset fact sheet provides answers to questions you may have about this provision.

You can get more information on the website for Federal, State & Local Government Employees.

If you work outside the United States

If you work outside the United States (U.S.) for an American company or, in some cases, an affiliate company of an American company, you and your employer may have to pay Social Security taxes on the same earnings to both the U.S. and the foreign country. But, if you work in one of the agreement countries shown in our fact sheet, How International Agreements Can Help You:

• Your Social Security coverage will be assigned to either the U.S. or the foreign country, and
• You and your employer don't have to pay taxes to both countries.

You can get more information about work outside the U.S. on our International Programs http://www.ssa.gov/international/ website.

Prepare for your medical needs

Medicare is a health insurance plan for people who are 65 or older and people who are disabled or have permanent kidney failure. Medicare has three parts—hospital insurance, medical insurance and prescription drug coverage. Most people have all three parts.

• Hospital insurance, sometimes called Part A, covers inpatient hospital care and certain follow-up care. You already paid for it as part of your Social Security taxes while you were working.
• Medical insurance, sometimes called Part B, pays for physicians' services and some other services not covered by hospital insurance. Medical insurance is optional, and you must pay monthly premiums.
• Prescription drug coverage, sometimes called Part D, pays for prescription drugs. Prescription drug coverage is optional, and you must pay monthly premiums. However, you also may be able to get extra help paying the monthly premiums, annual deductible and prescription co-payments.
• If you are already getting Social Security benefits when you turn 65, your Medicare (Part A) starts automatically. If you are not getting Social Security, you should sign up for Medicare close to your 65th birthday, even if you aren't ready to retire.

If you are already receiving disability or survivors benefits when you apply for retirement

If you are receiving disability benefits when you reach full retirement age, nothing will change, except that your benefits will be called retirement benefits instead of disability benefits. If you are receiving survivors benefits and you also are eligible for your own higher retirement benefits, you can switch from survivors to retirement benefits as early as age 62 or as late as age 70. In many cases, widows/widowers begin receiving one benefit at a reduced rate and switch to the other benefit at an unreduced rate at full retirement age. However, if you switch, you will be paid only the higher of the two benefits, not both.

One way to start planning for your future is by creating a my Social Security account online. With my Social Security, you can verify your earnings, get your Social Security Statement, and much more – all from the comfort of your home or office.

Additionally, Social Security has a variety of calculators to help you plan for the future. Using these calculators can help you understand the impact of the decisions you are making today. And, we know that you will have additional questions. We are here to help you. Just give us a call at your convenience.

Quick Calculator: With the quick calculator you get a rough estimate of your benefits in today's dollars or future dollars when you input your date of birth and this year's earnings. Does not include WEP reduction. You must be 21 or older for this calculator to work correctly.

Retirement Age: Find your full retirement age and see how your monthly benefits may be reduced if you retire before your full retirement age.

Earnings Test Calculator: See how your earnings may affect your benefit payments if you are currently working and are eligible for retirement or survivors benefits this year.

Early or Late Retirment?: Determine the effect on your benefit amount if you file for early or delayed retirement benefits.