Can an Annuity Help You Enjoy a Comfortable Retirement?
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Annuities for Retirement Income
An annuity might look like a safe, steady stream of income but is it really as solid as it sounds? Before locking one into your $1,000,000+ portfolio, it’s smart to break down the benefits, drawbacks, and hidden costs. Take a closer look to see if annuities actually fit your long-term game plan.
Take the first step toward meeting your financial goals by having a conversation with one of our licensed representatives. We’ll take the time to understand your unique situation while answering your questions about investing in annuities. Plus much more, including:
Reviewing Your Portfolio and Goals
Tell us about your retirement needs and wants, and hear how we can help you achieve them.
Evaluating Your Financial Plan
Get a second opinion on your retirement plan to make sure you’re on track.
Discussing Annuity Options
Learn the different annuity types and if they’re right for you.
What Is an Annuity?
If you want a reliable stream of income during retirement and prefer to keep your risk low, an annuity might catch your eye. Annuities are contracts offered by insurance companies. You invest a lump sum, and in return, the insurer agrees to pay you back through regular payments. These payouts are designed to provide long-term financial security, especially for retirees who want to supplement Social Security or pension income.
Before those payments begin, your annuity goes through what’s called the accumulation phase. This is the period where you fund the annuity, either all at once or over time. Later, your contract moves into the payout phase also known as annuitization, where the insurer takes over and starts sending you payments. While the idea seems simple, annuity contracts can be full of fine print and options that are tricky to understand, so it’s important to dig into the details before committing.
There’s no one-size-fits-all annuity. A fixed annuity gives you a predictable return, but usually with lower growth potential compared to other investments. On the flip side, variable annuities place your money in sub-accounts tied to the stock market. This offers a chance for higher returns, but with market-related risk. And that’s just the beginning. There are indexed, immediate, deferred, and several other types, each with unique features. Choosing the right one depends on your retirement goals, risk tolerance, and how soon you’ll need the income.
Annuity Riders
Annuity riders can boost your benefits, but at a price.
Many annuities come with optional features known as riders. These add-ons can guarantee things like a steady lifetime income or a minimum payout, which sounds like a win, right? But here’s the catch: riders often come with hefty fees. While they can provide peace of mind, they also drive up the overall cost of your annuity contract. So before adding one, make sure the value truly outweighs the price tag.
Annuity Pros and Cons
Annuities offer one major perk: predictable, regular income. That steady cash flow is what draws many retirees in. Plus, since annuities aren’t tied to the ups and downs of the stock market, they’re often seen as a safer, more stable option.
But let’s keep it real. Annuities aren’t designed for big-time growth. Compared to other investment vehicles, they usually grow at a slower pace. On top of that, they come with hefty fees. Think annual maintenance charges, administrative costs, and commissions that go to the advisor who sold it to you.
And here’s the kicker: your money could be locked up for years. Need quick access during an emergency? You might face steep penalties just to get your own funds.
For more than 20 years, we’ve been guiding clients toward their financial goals. Let’s connect and explore whether we’re the right fit to help you move forward.