Annuities: understanding the Benefits

Is Annuity Income Right For You?

Could Annuity Income Be Right For You?

Well, many factors affect whether an annuity could be a good choice in your retirement strategy. Different retirees have different needs and priorities. You need to take the time to learn if a certain product will fit your situation. How much you have in total assets, for instance, will impact whether an annuity could suit you. And if there’s an emergency, do you have access to money that isn’t in an annuity?

Additionally, what are your income needs? An annuity needs to be able to provide you with enough income to live off of and pay for your retirement living expenses. Figure out what your goals are in retirement. Fixed indexed annuities (or FIAs) hold onto your initial contribution so that it isn’t subject to a drop in the stock market. Some annuities may additionally provide a reasonable rate of return.*

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Your Annuity Income Options

It’s a good idea to get informed about annuities. Annuity income may be great for some retirees, but not a good solution for others. Remember, FIAs do protect your principal. They also could potentially provide a reasonable rate of return on your money. However, some retirees may be in favor of an investment that has a higher risk. Or their situation may simply not warrant an FIA. At our educational seminars, we can help you learn more about the different choices that may be available to you.

Potential Benefits of an FIA

An FIA holds both you and an insurance company in a contract. You contribute money, and the insurance company agrees to certain terms. For example, one benefit could be a lifetime income. You could choose to have that income begin after several years. Or you may decide not to take payments until after the annuity has potentially started to grow. There are positives for some retirees in using an FIA as part of their retirement strategy. This protection piece is often a valuable benefit for those in retirement.

FIAs in the Stock Market

FIAs don’t drop below your principal balance, even if the stock market does. Because your FIA isn’t linked directly to the stock market, you don’t have this risk. However, the insurance company may also have options of a minimum interest rate for you. Essentially, your interest may be lower than the stock market, because the insurance company is taking the risk. On the plus side, you don’t have to bear the risk of the market. For some clients, a balance of proper protection, as well as some risk, might be the solution. We believe in building a stable foundation first. An FIA may be an important part of that foundation for some retirees.

Income You Can Count On

Some financial vehicles can carry built-in risks. Some investments are certainly riskier than others. With an FIA your income may payout to you for your entire lifetime. Just think of how many retirement years you could have ahead of you. More and more retirees are living well into their 90s. Because of this, some retirees worry about their money lasting them the rest of their life. An FIA may be an option to consider if you want to secure your principal. A flow of income for the rest of your life may be an appealing and reassuring thing to you. And with so many options to choose from, there may be a type of FIA that works for you.

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Interest Rate and Annuity Income

What you get in interest from an annuity depends on a few variables. First, different insurance companies offer different products. Each of these has its own set of rules and benefits. The rate you get could change from one annuity product to the next. At Turney Financial Group, LLC, we work with insurance companies that have good reputations and solid business models. A low-risk product may mean that you see a lower interest rate. However, it may offer more protection. There’s commonly a trade-off when it comes to retirement financial products. Reach out to us today, to learn more about what your choices and potential interest rates may be.

*Reasonable rate of return over time. 

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