There is a lot of negative press surrounding annuities that is not justified. Most of revolves around high fees, agent commission incentives, lack of liquidity, etc. I can tell you honestly from many years of experience studying various types of annuities that these products play a significant role in producing lifetime income that creates peace of mind for many families. As you approach retirement one of your understandable concerns is creating an income stream that will last through your retirement. Regardless of your personal wealth, you have a specific lifestyle that you undoubtedly would like to continue as you travel through your retirement. We have several strategies, including tax deferred investments that give you and your family a reliable continuous stream of retirement income, much like a pension.  We also focus on minimizing any tax burden so you can keep more of what you have invested as income as you transfer funds from a 401(K) or other investment accounts.

As people live longer into their retirement, and as Social Security’s future becomes less viable, ensuring that you have other strategies in place can ensure you have a happy stress free retirement. One strategy that we recommend is to invest a portion of your retirement nest egg into a lifetime income annuity.  The amount invested should generate enough lifetime income such that the total amount of “guaranteed” income from Social Security, pensions and annuities will satisfy all of the basic living expenses.  Please note that today nothing is guaranteed.  For example, some people believe that government pensions, e.g., Social Security may not be around in the future.  Also, annuity income guarantees are subject to the claims paying ability of the underwriting insurance company.  However, we conduct significant research on the financial stability of insurance companies before we recommended one.

Following is a brief description of various annuity types with comments.

Single Premium Immediate Annuity (SPIA)

This type of annuity is similar to Social Security or most corporate pensions. The income stream is guaranteed for life, but access to the principal is lost. We do not recommend this type of annuity except in very special circumstances.

Multi-Year Guarantee Annuity (MYGA)

This type of annuity is similar to a bank CD in which the interest rate is guaranteed for a specified period of time, For example, a 5 year MYGA might have a guaranteed interest rate of, say, 3.25% each year for 5 years.

Variable Annuity

Lifetime income with principal risk.

Fixed Indexed Annuity (FIA)

Lifetime income with no principal risk. For most clients, we recommend the Fixed indexed Annuity (FIA). Lifetime income with no principal risk. The video below explains how an FIA works.

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