It's Vital To have the right annuities
There are many reasons to buy annuities, depending on your lifestyle needs. Among other benefits, they can provide you with guaranteed income for life, a way to provide for your loved ones, protection against losing your initial investment and help with long-term care costs.
Some people think annuities are complicated, partly because they come in so many varieties. But with the right help from us we can help you select what's right for you and your family.
All Annuities are almost custom made, you can select the parts that make them more beneficial to work for you. So what one person may consider complicated, others see as customizable.
In general, annuities provide safety, long-term growth and income. You can manage how much income and how much risk you’re comfortable with.
Annuities are a way to save your money tax deferred until you are ready to receive retirement income. They’re often insurance against outliving your retirement savings. And they can be a way to provide for your loved ones after you die or for yourself should you need long-term care.
Premium protection means you will always walk away with your purchase payment no matter what. In other words: You can’t lose the money you started with.
Fixed annuities of all stripes guarantee the safety of your initial investment. With fixed-indexed annuities, you have both premium protection when the market is down and the possibility of growing your investment when the market is up. You have upside potential (within certain limits) with no risk of loss.
Other investments, such as stocks, place your principal at risk. This is something many retirees, in particular, can’t tolerate, as they need their savings to fund their living expenses for the rest of their lives.
Income for Life
Many annuities provide the annuitant a stream of guaranteed retirement income for his or her entire life. Depending on the contract, they may also provide income for the annuitant’s spouse for his or her life. That’s known as a joint and survivor option.
A lifetime payout annuity may provide payments that are either fixed or variable. Variable payments change based on the performance of an underlying investment portfolio. These come with the potential for greater growth and the risk of loss.
With fixed payments, the dollar amounts are set in the contract and don’t vary. When the market is volatile or on a down cycle, knowing your monthly income will never go down can provide a sense of security that’s invaluable in retirement.
In fact, research has shown that retirees with guaranteed income are happier than those without it. The thought of losing your money, resources or lifestyle is terrifying. An annuity that provides a steady stream of income allows you to live with dignity through retirement. And a guaranteed lifestyle is priceless.
This feature of annuities is especially important in an age in which pensions, with their dependable income, are going the way of the dinosaur. And it can be difficult for a retiree to live off a lump sum of cash by spending just enough to live on without running out.
The promise of income for life is also insurance against outliving your assets. With a life annuity, no matter how long you live, you will continue to receive that stream of income. Even after you’ve collected your entire premium and any expected earnings, the income will continue. No other investment can provide that promise.
One of the reasons people become so anxious when they retire is because we go from living off reliable salaries to having almost no reliable income at all, when you have income from a job, what you spend one month doesn’t necessarily jeopardize what you can do the next month. But when you retire, every dollar you spend in your 60s is one that you won’t have in your 70s. This makes people reluctant to spend anything, because they’re worried about how it will affect them later.
Death benefit riders can allow you to pass on your annuity to one or more named beneficiaries when you die. How this will work will depend on the wording of your annuity contract.
Your contract may provide for a minimum number of payments for your beneficiaries, for example. It may stipulate the remaining principal be passed on. Funds may be distributed as a lump sum or a stream of payments.
With a joint and survivor annuity, your spouse can assume ownership of the annuity when you die under the same terms that you received your payments.
By including a beneficiary in an annuity contract, you can protect your heirs from having to go through probate. Probate is the legal process of dividing a deceased person’s estate and following a will. Going through probate involves costs and time.
Designating a beneficiary, other than a spouse, is more complicated with a life annuity. But one option is to have a “life with period certain” annuity. This provides that payments will be made for a minimum period of time, such as 10 years, and then for the rest of your life. If you die before the end of the period certain, your beneficiary can receive the funds for that remaining time.
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