What To Do With An Annuity?

The fastest growing segment of the population are folks 60 and older. How many of these Baby Boomers have set aside enough money to use for the rest of their lives? A third of people over 65 have less than $30,000 in savings when entering retirement.

Is an annuity a good investment option for you? How do you decide to check or bet when it comes to buying annuities?

Here are the top reasons to bet on and check out annuities.

Top Reasons Why You Should Check Or Bet On An Annuity

You’ve Maxed Out Other Retirement Savings Options – Bet

Contributing to a 401(k) and IRA deferrals are a great idea until you reach your max.

Say you’re in a high tax bracket and you’ve maxed out your 401(k). You will be in a lower tax bracket when you retire. In this case, an annuity is a great option for you.

The average fee to have an income rider attached to your Index annuity is about 1%. For example, if you invest $100,000 in an annuity with an income rider, your fee will start off at 1% of $100,000 or $1,000 per year. BUT PLEASE REMEMBER: THAT FEE WILL GO UP EVERY YEAR BASED ON EITHER THE ACCOUNT VALUE GROWING OR, IN MOST CASES, THE BENEFIT BASE GROWING.

You Already Have All the Money You Will Need to Live on For A Long Time – Check

Check or bet? Are you wealthy, have a paid off mansion, and have trusts set up for your children and grandchildren? Pass on an annuity.

You are more than taken care of for the rest of your life and won’t need annuity payments.

You Have Enough Financial Assets to tie up a lot of Money for a Long Time – Bet

If you’re young when you enter into annuities, you won’t have access to your investment for a long time.

Say you come into a chunk of money when you’re 30 and want to invest in an annuity. Can you make it without those funds for another 29 1/2 years? An annuity may be good for a portion of that money.

Have a well-funded savings account and a diversified portfolio to compliment it.

You have a Health Condition That Could Shorten Your Life – Check

Annuity income depends on you surviving past your life savings. A short lifetime due to health concerns makes annuities less attractive investments. You can choose to have a beneficiary on an annuity. They will receive the account balance the day of your death.

There are better options for inheritance that would carry a lighter tax burden. Low-risk investments like mutual funds would be a good option. But an Index Annuity can help you manage the disbursement of those payments after you pass away. For example, if your Index Annuity grew to $100,000 and you passed away, you could dictate to the insurance carrier how your beneficiaries will receive those funds. This means that instead of a lump sum payment to one kid, you could dictate that he receives $1,000 a month until the contract goes to zero.


You are 60 Years Old or Older and Won’t Have Dependable Income in Retirement – Bet

Annuities protect you from outliving your retirement savings. Say you’re near the retirement age, annuities are an even better bet. If you are a healthy 60-year-old man, you could live another 20 years. Are you a woman, another 40? 85% of people over 100 years old are women. Can you afford to live that long? Check or bet? Bet – An annuity can guarantee it.

You are Young and Don’t Already Have an Investment Portfolio – Check

Annuities are a good addition to an already diversified portfolio to cut risk. If you are still young and in the beginning of your career, you have time to invest in higher risk options. Consider investing in mutual funds and stocks first and adding an annuity in your older age. Annuities should supplement the savings and investments you’ve already saved.

You Aren’t Willing To Do Your Own Research – Check

Annuities are confusing.

You need to do your own research and go through the product with a fine tooth comb. Fill out this form and call us. We’re here to help you navigate the annuity waters.

There are consultants who will offer products that carry high commissions but a low value to you. These products are often the most confusing. If you want an easy, straightforward annuity option, you’ve come to the right place. We are industry leading professionals who here to help and educate you.

Other Factors to Keep In Mind When Deciding on Annuities

Tax rates need to be a factor when deciding to check or bet on an annuity.
When the payout starts for the annuity, it will count as regular income. Generally, the capital gains tax rate is 15%. This is the tax you would be facing if cashing in on stock or other investments. This is a consideration that we will discuss while meeting with you.  That higher tax rate also gets you the lowest risk. A fixed annuity has a guaranteed payout even if the market fluctuates.

IRA’s and other investments fluctuate with the market. Your investment may be suffering a loss when it gets to crunch time and you need that money. A guaranteed annuity is a great backup plan for these other investments. You will also earn more interest on Fixed Annuities than a savings or money market account.

Riders can make annuities more attractive to those who have decided to check. You can add extended care or terminal illness waivers to cover long term care. If you have a family history or have a condition that may need these services, this rider could be a benefit.

You can add a death benefits rider to make your annuity a better inheritance. These allow for value gains for the beneficiary following your death. While still not the best choice for inheritance, this can make the situation a little better.

Adding these extra products to the annuity you’re looking at can make them a better bet for you. The last thing you want when you are approaching the sunset of your life is to worry about money. Annuities provide a guaranteed source of income which can be comforting. Choosing between different types, different rates, and other options can all become overwhelming.

We want to help provide clarity on your best options for retirement. We want you to be set up with guaranteed income for life. Let us answer your questions and clear up any confusion you may have.

Contact us here to go over your options, and we can advise you which annuity best fits your needs.