Annuities |
Research has shown that having sufficient income in retirement that you can NOT outlive leads to greater happiness than having your emotions tied to the ups and downs of the stock market. Those market gyrations can create uncertainty and stress in your life at a time when you should be enjoying life to its fullest. Social Security and pensions provide this kind of lifetime income that you can’t outlive. Unfortunately, Social Security almost certainly will not be enough retirement income to live upon comfortably and very few people have pensions available to them these days. For the fortunate few that do have a pension, often they’re finding that the benefit growth has been frozen and that pension will not be as generous as they were in the previous generations. You can, however, recreate this outcome for yourself through the use of annuities.
Annuities are a bedrock of one of the three main retirement income planning strategies known as the “income flooring method”. You can purchase an annuity to create an income floor for yourself so that you know that, combined with Social Security, you will have guaranteed income to cover your basic living expenses such as food, housing and utilities. The remainder of your assets would typically be geared towards more robust growth, depending on your risk tolerance and goals, of course. While the annuity would cover your day-to-day expenses, the remainder of your portfolio could be used for non-necessities such as vacations and hobbies. This strategy provides for peace of mind in knowing that your needs will be met but maintains enough liquidity to enable your desired lifestyle. Annuities offer the ability to guarantee yourself income for life – you cannot outlive the income that is generated through the investment of either a single premium or a series of premiums. Annuities can either pay income on an immediate or deferred basis. In addition, there are fixed, fixed index and variable annuities, all of which track to different underlying indexes or investments. From annuity to annuity, there are different payout rates, “rollup” amounts, index participation rates, surrender charge schedules, and fee schedules. As a result, there are hundreds of annuities to choose from, from a number of insurers with differing financial ratings. I work hand-in-glove with very experienced annuity analysts to survey the entire landscape to find the annuity that best suits your particular situation, such as your current age, the age in which you’ll need the income, pay out rates, the crediting method for account growth and whether it is a single life annuity or a joint-and-survivor annuity. Annuities can allow you to sleep at night with the peace of mind of knowing that you’ll receive monthly income that you cannot outlive. However, it is imperative to choose the correct annuity for your particular situation. Please contact me at jeff@jeffdietzfinancial.com or 804.608.9775 to help you with this very important retirement planning decision. |