Speak with a Registered Agent: 1-866-223-2121

You Might Want An Annuity If…


It’s no secret that annuities have a bad reputation as retirement savings tools. Some annuities have high fees, many are extremely difficult (and costly) to liquidate if you need your money and the complexity of them often makes the heads spin of even the most experienced investors. Yet, given even these not-so-glorious attributes, some annuities are absolutely worth exploring. Here’s a list of a handful of scenarios where annuities would be great financial tools, according to a recent article from U.S. News.

  1. If guaranteed income for life is appealing to you, you might want to check out annuities. The lifetime income produced from an annuity is safe from market volatility, providing steady monthly payments until the policyholder passes away. If you priority is to make sure you don’t outlive your money, an annuity might be right for you.
  2. If you would like to secure guaranteed income for your spouse, an annuity can provide that. Certain types of annuities offer an option that provides  a lifetime guaranteed income for both you and your spouse. When you purchase an annuity, the insurer who writes the contract is banking on you and your spouse not living to your life expectancy age, while you’re betting that you live longer. It’s crucial to shop around, looking at a variety of rates from a number of insurers, as there will always be differences in the amount each are willing to pay out.
  3. If you’re interested in a low-risk portfolio above all else, an annuity may be right for you.  As long as you understand the terms of your annuity and pay the predetermined, agreed upon amount, you can secure guaranteed, no-risk income for life. If you fear market volatility and/or running out of money, annuities can make a whole lot of sense.
  4. If you are looking to create your own pension to fund your retirement, an annuity might be right for you. Today, many employers aren’t providing financially secured pensions for their employees. “Retirees used to count on the three-legged stool for their retirement income: Social Security, employee pensions and individual savings,” said Alex Whitehouse, a financial advisor in Vancouver, Washington. “Now only a small fraction of private sector companies provide traditional pension plans. An annuity could be used to generate lifetime income and replace the pension leg of the stool.”
  5. If you’re looking to protect your retirement assets from taxes, some annuities can provide that. Traditional retirement accounts, like IRAs and 401(k)s grow tax-deferred, so you don’t pay taxes on your money until you make withdrawals. Annuities provide similar tax benefits. “Using an annuity for a portion of your assets will allow your money to grow tax-deferred,” said Josh Brein, Seattle financial advisor. “So, if you’re not planning on taking all the money out for a while, then an annuity could be a good way to reduce your tax load in retirement.”

While annuities can make a lot of sense for many retirees, there are some risks that you should be aware of.

“Buying guaranteed income with an annuity is usually a very expensive proposition, especially at today’s interest rates,” said Grant Bledsoe, a financial advisor from Oregon. “Additionally, insurance companies and salesmen will normally push their more expensive variable and index annuities,” he added. It’s critical that you understand your annuity contract inside and out before signing on the dotted line. It is highly recommended that you work with a trusted financial advisor to set your priorities and discuss your best options. Guaranteed income for life might sound very attractive, but if an annuity product doesn’t align with your goals, then it’s not a good fit for you.

Written by Rachel Summit

Follow Rachel, aka Finance Mama, on Twitter and Google+

For more information about the product mentioned in this article contact us here:

Information Request Form

If you have questions or would like more information, please complete this form and a licensed professional will be happy to help.