When Does an Annuity Fit Into Your Retirement Planning?
Whether you are just getting started or already have a plan in place, there is a few good reasons why consumers choose to use an annuity as a part of their retirement planning.
Something Annuity Alliance always shares throughout our articles involves the main reason why people choose to purchase an annuity – it provides guaranteed lifetime income (based on the claims paying ability of the insurance company). You basically can place money into an annuity to generate an income stream in a series of payments or even take out a lump sum payment. It’s your choice.
That’s where you would want an annuity. If you think you will have a long life, most annuities state you will not outlive your money even if you live to be 90+! With questions about how long Social Security will last, you may want to place some of your retirement funds into an annuity to “protect” your future income needs.
Another annuity fit involves the fluctuation in the stock market and money tied into that retirement vehicle. Due to the pandemic and its effect on businesses, a bear market has the potential to erupt at any time, and that could have a negative impact on your hard-earned retirement savings. An annuity protects your funds from market fluctuations as you cannot lose premium in an annuity.
Some couples have difficult managing their budget and expenses. Without that paycheck coming in, you may want to cover your future spending habits by utilizing an annuity to provide income to replace that lost check every couple of weeks.
One more great annuity fit involves preparation for the unknown. What if Social Security runs out? What if your children need assistance for a home or birth of a child? What if you have to go a lot of medical procedures and you don’t have enough coverage? An annuity provides peace of mind for you as your money is protected in a vehicle designed to grow in the short-term and gives you access to an emergency fund if something does happen.
You want to be financially comfortable during your retirement years as you’ve earned the time to travel, relax, and spend time with your loved ones. That’s what an annuity can do to help you toward that goal.