The fact is about 6 in 10 American workers are worried they might outlive their retirement savings. This might explain why nearly half of them plan to buy an annuity by the time they retire or already have one.
The ultimate goal of an annuity
The ultimate goal of an annuity is to give you protection of your principal, growth, and if you choose, a steady stream of income throughout your retirement.
But are annuities really the best way to secure a stress-free retirement?
Let’s take a closer look and see if they should be a part of your retirement savings strategy.
First of all, what is an annuity exactly?
Often marketed as a financial product, an annuity is basically a contract between you and an insurance company.
Annuity is designed to provide potential growth income. This income is guaranteed for the rest of your life if you choose, protection from loss and in some annuities market return.
You make a payment (or payments) to an insurance company and, in return, they promise to grow that money, protect the principal, guarantee the returns in some cases.
That insurance will send you payments during retirement or for your lifetime if you choose that type of annuity.
Annuities are very complex and they come in several different shapes and sizes, but when you boil it down, they’re an insurance product.
Think of it like this , YOU insure your home , car, health, life and in this instance your money.
You’re paying the insurance company to take on the risk from there, the various types can get complicated.
If you’re not careful it will make your head spin, so let’s try to break it down.
Can I create an annuity based on my own Preferences
Not all Annuities are created equal . There are a variety of annuities to choose from each having different bells and whistle to include or not.
You can create an annuity based on your preferences and your own personal situation; making sure to meet your personal needs.
You have a choice in whether they payout an income for life, or over a period of time, or at all.
You can choose growth, fixed or not, or tied to the market, with or without market risk.
Your annuity can include provisions for Long Term Care if you like.
Do you want it to pay to a beneficiary at your death ? Charity? Or not at all? Are you looking to leave a legacy ? Or Just need income ?
As you can see there are a great deal of options .
How many types of annuities are there
There are six different types of annuities and over five hundred to choose from.
Not every advisor, broker or agent can sell them all. A captive agent , advisor or broker can only sell what they have within the firm they represent.
Most of the time thats just a handful that they choose from to fit your individual need. Whats the chances that the ten they have will do just that?
An annuity can help cover your essential expenses in retirement along with other sources of guaranteed income like Social Security, pensions, and other annuities.
Combining income from multiple sources in retirement annuities follow the same principle as diversifying investments during your saving years.
Annuities are attractive to some investors because they offer the ability to build tax-deferred savings.
They can help to protect the money that you’ve already saved, and generate a steady stream of income in retirement. “Life expectancies are getting longer.
Should annuity be apart of my retirement
The bottom line on whether they should be a part of your retirement strategy or not is Yes and No.
While some may fit you perfectly others may not and picking the right advisor too help you decide is key.
Millions of Americans will retire without knowing whether they will have enough money to cover their expenses don’t be one of them.
If there’s a gap between what you have and what you’ll need for your retirement then own the gap and retire the risk of you outliving your retirement savings
Fun facts about annuities
Annuities grow tax-deferred
Annuities avoid probate
Annuities avoid lawsuits
Annuities can provide an income you cannot out live
Annuities are insured
Annuities have long-term care provisions
Not all annuities have fees
Annuities that have fees are less than broker fees
Annuities can be left to charities or anyone of your choosing
Fixed annuities have guarantees and protect your principal
Interest-indexed annuities provide for market gain without market loss
Let Jarvis Financial Inc Help
We help our clients find clarity in their financial lives; so they can feel more confident and free to do the things they’re passionate about.
We believe you should enjoy your wealth and your time by doing the things that inspire you.
We strive to help you find sound financial strategies that enable you to pursue and protect what’s most important.
Our commitment to you, as our client, is to provide great service and advice that’s consistent with your individual financial goals.
We utilize our skills in retirement, investments, estate and insurance planning to help you solve the financial complexities of making a life change or adjusting to new circumstances.
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The initial consult is always free.
We offer a free consult so that we may determine if your needs and our practices are well-matched.