Annuities FAQs: Fidelity Freedom Lifetime Income®
What is an immediate variable income annuity?
An immediate variable income annuity is a contract with an insurance company that provides lifetime payments in return for a lump-sum purchase. However, as the name suggests, these payments can vary depending on the performance of the underlying fund you choose. Because payments are tied to market performance, they are not guaranteed and the amount of your payments will go up and down over time. While the potential for increasing payments can help protect against inflation, it's important to remember your payments may decrease.
Can you make withdrawals from FFLI?
This product offers an optional withdrawal feature when purchased with pretax money,1 which allows you to access money from your annuity at any time throughout your withdrawal period. This period is from the time of your first payment until the end of your withdrawal period. The withdrawal value (the amount available to be withdrawn) changes throughout your withdrawal period. Keep in mind, taking a withdrawal will reduce the amount of each of your future annuity income payments.
How does an income annuity payment differ from a systematic withdrawal plan?
An income annuity payment is similar to a systematic withdrawal plan, in that both can provide payments on a specific schedule. The difference is that only an income annuity can guarantee2 that you receive income for the rest of your life. A systematic withdrawal plan allows you access to assets and to stop or start payments at any point during the payout period, but there is the risk that income could run out, depending on the level of withdrawals, the amount of the withdrawals, and how the underlying investments perform.