An annuity can be the type of retirement income source you need. Today, it has become very difficult to plan for retirement. Many employers who used to offer pensions have pulled back in favor of mostly employee-funded retirement accounts such as 401ks and IRAs. This leaves you unable to build your retirement fast enough to meet your needs. Yet, an annuity can help. The key to remember here is that an annuity is an opportunity to create a reliable, even guaranteed income stream throughout your retirement.
When Should You Buy an Annuity?
At Fortified Retirement, our goal is to help you understand when an annuity can benefit your future. To do this, we encourage you to enroll in our pre-retirement financial planning workshop. To help you learn more about what an annuity can do for you now, here are a few key things to consider when you should buy one:
- An annuity may be right for you if the uncertainty of the stock market is too risky for you.
- You may wish to invest in one when you want a fixed income – an interest rate you can count on to remain the same.
- You want predictable income that you cannot get from most other sources.
- You are worried you may outlive your existing income sources during your retirement.
- You want to invest in long-term care protection, so you don’t have to worry.
If these situations sound like they could benefit you, it is time to consider an annuity. Which one should you consider buying, then?
Choosing the Best Annuity for Your Needs
As noted, it is best to work with a financial planner to make decisions based on your specific needs. However, you do have options when it comes to annuities. Take a closer look at some of the features to consider when comparing the various annuities available.
Immediate and Deferred Payment
Some annuities allow you to choose immediate payment. Once you pay into the annuity, you can begin to receive routine payments immediately. For others who have some time, it is possible to defer payments. This allows you to benefit from a higher payout amount down the road.
Though there are some variable annuities, we tend to recommend the benefits of a fixed rate annuity. Even here, you still have options to choose from among various annuities. You can choose those with a fixed rate that meets your goals. With a fixed rate, there is never any risk of not knowing what your income will be in the years to come. It’s fixed, clear, and easy to plan for the long term.
Guaranteed Lifetime Annuities
The best feature of some annuities is that they guarantee an income to you for the rest of your life. It is not possible for you to outlive your annuity. For many men and women over 65, this is critically important. Funds in a retirement account run out. Annuities do not.
Some annuities allow you to withdraw all of the account value (the actual account value at the time). When you do this, there is no surrender charge you have to pay. This is common in other types of retirement accounts. Though this does not allow you to access the guaranteed amount, which is typically higher, it gives you some ability to maintain access to your funds.
Some annuities give you the ability to choose the type of investment made. Others do not. The key to remember here is that whether or not an investment choice is available, you should receive a fixed payout based on the date you start and your age.
Which one is right for your needs? To determine this, you need to sit down and talk to a financial professional who can help understand your life, your needs, and your retirement goals. Compare several annuities to determine which one can help meet any need you have. At Fortified Retirement, we can help you do this when you enroll in our complete free retirement planning seminars. This is the easiest way to learn more.
Learn About Your Options in a Retirement Income Planning Seminar
Every person’s needs are unique. When you enroll in a financial planning workshop that offers a specific retirement income planning seminar, you can gain insight into which type of annuity fits your needs. At Fortified Retirement, we aim to help you find the right type of investment plan for any of your goals. If you are pre-retirement, attend our free seminar to learn more about your options in annuities without risk or obligation.
Licensed Insurance Professional. Provides general information about insurance and retirement-related products and services. These products and services may not be specific to a particular state. Information provided on this website, in seminars or through printed or other published materials are not intended as specific legal, accounting or investment advice to an individual’s particular situation. By providing your information to us, you agree that we may contact you regarding the potential sale of annuity and/or insurance products. Information provided by Licensed Insurance Professional does not necessarily represent that of the individual professionals presenting this information. All the information presented is believed to be accurate and is secured from reliable resources, however, no guarantee is made to the completeness or accuracy of the information presented. Any opinions expressed are those of the author and the material presented is for educational and informational purposes only and is not intended as legal, investment or tax-related advice.