• Mark Dierolf

4 reasons to use a retirement annuity

Updated: Jul 11

Annuities are used for estate and financial planning because they offer these benefits:

  1. Growth of retirement savings or a benefit;

  2. A promise of payments for a certain period or for life;

  3. A benefit for heirs when life insurance is no longer an option;

  4. Or all of the above.

Examples of an annuity are pension payments and Social Security. These are often called "income" annuities. When payments are deferred, they are call "deferred" annuities. Retirement savings and savings not needed until age 60 are examples of "deferred" annuities.

An income annuity often works like a loan in reverse with you receiving payments from the insurance company. Income annuities with a lifetime payment promise offer you no worries of outliving your savings.

"Deferred" annuities delay payments so you can grow your savings. Growth is often tax-deferred until savings is withdrawn.

Variable annuities offer payment promises, but are not safe from market volatility. Variable annuities are for savers with investment experience and who can afford to lose money.

A fixed-rate annuity is the way to go when no worries is the goal:

  1. Earnings tied to a market index strategy;

  2. Earnings paid like a bank CD;

  3. Safety from market downturn;

  4. Or all of the above.

Fixed-rate annuities offer a promise to pay earnings without the risk of you losing your savings. No more worries of a market timing or a downturn.

Annuities are offered by life insurance companies and are backed by the insurer's claims-paying ability. Annuities often pay better than a bank CD and may be a better choice when you don't need the savings until age 60.

Not everyone can qualify to fund their own annuity. A saver can be too young or too old based on the goal. And savings for living expenses and emergencies should not be used.

Savers love annuities when they know how they work. No charge for a review. Call today: (831) 753-0507

Recent Posts

See All