• Mark Dierolf

4 reasons to use a retirement annuity

Updated: 3 days ago

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

  1. Growth of retirement savings or a benefit;

  2. Guaranteed payments for a certain period or for life;

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

  4. More than a bank CD when savings is not needed until age 60;

  5. Or all of the above.

Annuities are like a pension plan or a timed investment with benefits when payments are deferred, and come in many flavors:

"Income" annuities guarantee payments. They either work like a loan in reverse with you receiving guaranteed payments from the insurance company; or they work like a pension with a lifetime guarantee so you have 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 Growth is often tax-deferred until savings is withdrawn in either payments or a lump sum.

Variable annuities offer payment guarantees, but not safety from market volatility. Buy only when all three of these apply: you need the guaranteed income rider; have investment experience; and can afford to lose money.

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

Fixed interest like a bank CD;

  1. Earnings tied to a market index strategy;

  2. Safety from market volatility;

  3. Immediate benefit for heirs;

  4. Or all of the above.

Annuities are offered by life insurance companies. They are backed by the insurer's claims-paying ability, and are ideal for your financial security.

But annuities are not for everyone and customers need to qualify. An insurer can't accept your savings unless you can afford to let it work for you during the term. Age also matters because of the immediate benefit for heirs.

Customers love annuities when they understand the plan. Call for a review of an existing annuity or to learn if one is right for you.

No charge for a review. Call today: (831) 753-0507

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