Annuities
Annuities can be an important strategic piece of your retirement portfolio. They provide advantages that other investments do not.
Fixed and Fixed/Indexed deferred annuities can be an important part of a diversified retirement portfolio. A major reason people chose an annuity is because they protect your investment even when there are downturns in the market.
Depending on the type of annuity and the options you choose, you can get a guaranteed rate of return for your retirement money, protect your nest egg and income from drops in the market, your gains are tax deferred, they can secure a death benefit for your loved ones and, of course you can choose to annuitize your plan and receive protected lifetime income.
With fewer people covered by traditional pension plans, annuities can fill a gap in retirement portfolios by providing a guaranteed monthly check for as long as you live. In essence, they can provide you with a personal pension plan.
Most people who buy annuities buy them planning on growing their investment and do not turn on the annuitization benefit. Any annuity that is in growth mode and not currently annuitizing is considered a deferred annuity. In contrast you could buy an annuity and initiate payment stream from day one, these are considered immediate annuities.
When you buy an annuity, you and your advisor should have purchased it based on a plan or strategy. For instance, are you planning to safely grow your annuity and take partial distributions at a regular frequency without annuitizing it, or to grow the annuity and roll it over to a new annuity when it matures, turning on annuitization at a planned point in time, or using them to safely grow and when you pass on, having the accumulated balance pass on to your stated beneficiaries?
Because an annuity is an insurance product it will pass to your beneficiaries free of any probate restrictions.
If you have questions about how an annuity can safely grow and keep your hard-earned money safe, we are glad to review the mechanics of how annuities work. That is not optional, we make certain you have an understand of your final choice before it becomes your final choice.
There are different formulas insurance companies use to determine an annuities growth so its important you understand what you are buying into and any advantages and disadvantages of your choice.
If an annuity is an appropriate investment for you, we have the advantage of working with a variety of highly rated insurance companies to find you an annuity that truly meets your objectives.
We believe that before a decision is made to purchase an annuity, the decision must clearly be determined to be suitable. To do so, we consider your financial health. That’s your current asset allocation, portion of liquid assets, current and future income, and any anticipated changes to your expenses before making a recommendation.
In addition to reviewing the benefits of buying your annuity, we will review the “what if” consequences of changing or canceling your policy.
With any investment, we believe it’s just as important to understand the impacts of exiting as it is to understand the benefits of buying in.
If you have questions about how an annuity could fit into your financial plan, please contact us today.