Retirees, Ladder Annuities to Hedge Your Bets

Staggering annuity purchases over time can boost your guaranteed retirement income and lower risks.

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Handing over a large lump sum to an insurance company in exchange for a stream of guaranteed payments is a hard pill to swallow for many investors. Add in uncertainty about interest rates, which affect annuity payouts, and the decision to buy an immediate annuity becomes more challenging.

After three years, the first annuity will come up for renewal. You can withdraw the money, recommit those funds for another three years or extend the ladder by choosing a longer maturity. You have the same options, he says, each time another annuity in the ladder comes to the end of its initial guarantee period.

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Mary Kane
Mary Kane
Associate Editor, Kiplinger's Retirement Report
Mary Kane is a financial writer and editor who has specialized in covering fringe financial services, such as payday loans and prepaid debit cards. She has written or edited for Reuters, the Washington Post, BillMoyers.com, MSNBC, Scripps Media Center, and more. She also was an Alicia Patterson Fellow, focusing on consumer finance and financial literacy, and a national correspondent for Newhouse Newspapers in Washington, DC. She covered the subprime mortgage crisis for the pathbreaking online site The Washington Independent, and later served as its editor. She is a two-time winner of the Excellence in Financial Journalism Awards sponsored by the New York State Society of Certified Public Accountants. She also is an adjunct professor at Johns Hopkins University, where she teaches a course on journalism and publishing in the digital age. She came to Kiplinger in March 2017.