CD vs. Tax deferred annuity
Let’s take a apples to apples approach at looking at some of the differences between a CD (Certificate of Deposit) and a annuity.
CD’s have immediate tax liabilities,; this creates the need for a higher rate of return
With a fixed annuities, you will eventually have to pay taxes on the money you withdraw. However, as the numbers below shows, fixed annuities require a much lower interest rate to generate the same return as a CD.
For example, if your income places you in the 28% tax bracket and you purchase a tax-deferred fixed annuity with a guaranteed interest rate of 4.25 percern, you’d need a CD with an interest rate of more than 5.9 percent to outperform the annuity.
Now let’s say that your income places you in the 25 percent tax bracket and you purchased a fixed annuity with a guaranteed interest rate of 3.5 percent, you would need to purchase a CD with an interest rate of more than 4.67 percent to outperform the annuity.
If your CD’s are not performing like you would like them to, let’s talk about how annuity might be able to help you out. I offer annuities through multiple carriers and ranging in years from 2-14.
Oh and with most annuities unlike most CD’s you can withdraw a portion of the annuity without any penalties from the carrier.
