What is an immediate annuity

An immediate annuity can provide you with predictable income during retirement that you can use for essential living expenses. With an immediate annuity, you can provide guaranteed income for life or a set period of time. You can begin taking income immediately or defer your payments for up to a year. Here are some of the benefits of immediate annuities:

Steady income that starts immediately

With a single-premium immediate annuity, you can turn a lump sum from an inheritance, sale of a business or other assets into a stream of income.

Income you can’t outlive

If you purchase an immediate annuity with single or joint life options, you’ll have guaranteed income for life no matter how long you live.

Access to your money

If you purchase immediate annuity and elect a term-certain or Life with Cash Refund option, you’ll have access to your money through a Liquidity feature.

Hedge against inflation

A cost-of-living adjustment (COLA) can be elected at contract issuance that will automatically increase your annual payment by 1%, 2%, 3%, 4% or 5%. Please note that based on the tax status of the contract and age of the contract owner, not all COLA percentages may be available at all times. Check with Nationwide for availability.

• How can an immediate annuity provide income before you reach full retirement age for Social Security?

• Risk tolerance. What type of investor are you?

• Payout options. What are the different ways you can take income from an immediate annuity?

Immediate annuities limitations and restrictions

Immediate annuities are long-term, tax-deferred contracts you purchase from an insurance company that provide immediate regular payments in exchange for a lump-sum investment. These payments are guaranteed to last for life or a specified period of time.

• Withdrawals are taxed as ordinary income

• A 10% tax penalty will be applied on top of ordinary income taxes if you are younger than 59½

• With a Liquidity feature, a fee may be deducted from the remaining liquidity value or lump-sum withdrawal for each withdrawal taken

• Annuity guarantees are subject to the claims-paying ability of the issuing insurance companies