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Might Be Time For An Immediate Fixed Annuity


In Bankrate’s “Annuity Can Offer Reliability In Retirement,” Dr. Don Taylor, CFA, CFP answers a retirement question about annuity products.  A woman asks if she and her husband, who is 79 and in fair health, should buy an annuity with some of their $200,000 in savings.  She says that when her husband dies, all she will receive are his Social Security payments and she is worried about their savings just sitting there without earning anything.  While this is all the information that she wrote to Dr. Taylor, I think more details are necessary to make a clear determination.  I wonder what her age is and if the Social Security payments are enough with which to cover their monthly expenses.

His response to the woman’s inquiry about annuities is that the security they offer with guaranteed retirement income makes them a useful investments.  Variable annuities, which depend on the performance of a specific fund to determine your return, are not the right investment for this couple because she states that she is risk averse.  Immediate fixed annuities could work well for them, especially because they are the most simple annuity and can offer a guaranteed income payment over the couple’s lifetimes.  Dr. Taylor says that he prefers financial flexibility, something most annuities do not offer, and recommends the woman purchase an immediate fixed annuity after her husband’s death.  But he could easily live decades longer and if they are using some of the savings to cover monthly living expenses, I think a joint immediate fixed annuity could be right for them now.

Written by Rachel Summit

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