Are you worried about your financial stability in retirement? Are you concerned about outliving your savings? Maybe you’re worried about a market downturn impacting your income. Perhaps you’re concerned about health care costs or the need for long-term care.
The truth is that there are a variety of risks and threats that could destabilize your retirement. Risk management is at the core of any solid retirement strategy. You have to identify potential threats and then develop tools and tactics to minimize their impact or their likelihood of happening.
Fortunately, there are a number of different tools you can use to protect yourself One of the most effective and versatile is an annuity. Annuities are insurance products that offer a variety of different features and benefits to meet an assortment of needs.
Below are three financial challenges that concern many retirees. They can all be addressed with an annuity. If you’re approaching retirement and haven’t considered an annuity as part of your strategy, now may be the time to do so. A financial professional can help you analyze your needs and determine whether an annuity is right for you.
There was a time when retirees could enjoy guaranteed* lifetime income from Social Security and an employer pension. Today’s retirees don’t have that luxury. Social Security usually isn’t sufficient to fully fund a retirement, and pensions have long been in decline.
If you’re like most retirees, you’ll have to generate much of your income from your personal savings and investments. If you spend too much too quickly, or if your values decline, you may not have enough income to last for life.
An annuity can generate a guaranteed* income stream that lasts for life. A single premium immediate annuity (SPIA) allows you to convert a portion of your assets into a lifetime income stream that’s guaranteed* regardless of what happens in the markets.
You could also use a variable annuity or fixed indexed annuity with a guaranteed* income benefit. You have the potential to increase your assets, but you can also take withdrawals that are guaranteed* for life. A guaranteed* flow of income could provide you with more financial certainty and stability in retirement.
Many people become more risk averse as they enter retirement. After all, you’ve worked hard to accumulate your retirement assets. The last thing you want is to lose them in a market downturn.
While you may want to avoid all risk, you’ll likely still need some growth throughout your retirement. Fortunately, you can use an annuity to earn some return on your assets without downside market risk. Fixed deferred annuities offer a fixed interest rate over a set period of time. Since they don’t have market exposure, your premium is guaranteed*.
You could also consider a fixed indexed annuity, in which your interest rate is linked to a market index. The better the index performs, the higher the interest rate. However, you can’t lose money. If the index declines in value, you simply earn less interest. Again, most of these annuities have a premium guarantee*.
Taxes are a challenge for many retirees. They can take a bite out of everything from Social Security benefits to investment distributions to pension payouts. If you fail to budget accordingly, taxes could limit your income and your ability to support your lifestyle.
Annuities are tax-deferred vehicles. That means you don’t pay taxes on growth inside the annuity, no matter your age or the amount of money in the policy. Assuming the annuity isn’t held inside a traditional IRA, you can leave the funds in the policy to grow tax-deferred as long as you like. You pay taxes when you take a distribution.
Ready to see if an annuity fits into your retirement strategy? Let’s talk about it. Contact us at Northern Plains Insurance and Financial. We can help you analyze your needs and implement a plan. Let’s connect soon and start the conversation.
*Guarantees, including optional benefits, are backed by the claims-paying ability of the issuer, and may contain limitations, including surrender charges, which may affect policy values.
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.
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