What makes an annuity an annuity is its ability to provide guaranteed, lifelong income in retirement. Some annuities exist to do only that, while others have that as just an option. The former (provides income and income only) is called an income annuity. There are three types of income annuities:
The other type (has the option but not requirement) to provide income is known as a deferred annuity. There are three types of deferred annuities:
Blueprint Income offers all types of income annuities, as well as fixed annuities.
An immediate annuity, a.k.a. single premium immediate annuity or SPIA for short, is the simplest annuity product on the market. It’s purchased by people retiring within the next year or already in retirement. For a given amount of money paid upfront today, you receive a set amount of monthly income starting within one year that lasts as long as you live.
A longevity annuity, a.k.a. deferred income annuity or DIA for short, provides lifetime income starting 2-40 years from now. Money is paid upfront, but the income payments you receive are delayed for a period of 2-40 years. Because of the deferral, you will receive higher monthly income as compared to an immediate annuity. Longevity annuities can be good for people who want income starting years in the future.
A Qualified Longevity Annuity Contract, or QLAC for short, is a special type of longevity annuity. The QLAC is a way to purchase a longevity annuity using your qualified retirement savings (such as from an IRA or 401(k) rollover) but delays the start of that income to after age 72. It’s given this special designation because it overrides the IRS required minimum distribution (RMD) rules.
A fixed annuity, also known as a multi-year guaranteed annuity (MYGA), provides a guaranteed rate of return for a predetermined period of time. It is most similar to a Certificate of Deposit (CD) that is offered by a bank or other-FDIC insured institution, except that it is offered by an insurance company. When compared to CDs, fixed annuities offer higher guaranteed crediting rates over longer time horizons (2-10 years), tax-deferred growth, the ability to annuitize upon maturity, and liquidity via penalty-free partial withdrawals for those 59½ or over.