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4 Questions to Ask Before Adding an Annuity to Your Retirement Plan

Annuities are a worthy option for savers looking to add an element of protection to their retirement strategy. The key: Work with an independent adviser and understand WHY each product is being recommended.

There are certain topics you learn to avoid while at a dinner party. Religion. Politics. Medical issues. Guns. Gossip. Gluten. I’d also throw any discussion of annuities into that mix.

4. What are some other features I should know about?

Again, the options are pretty much endless. Your adviser can help you find the right fit when it comes to tax efficiency, inflation protection, survivor benefits and more. You also should discuss how much of your nest egg you want to put into an annuity, because it should never be all of it.

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Despite what you hear from the pundits, annuities are a worthy option for savers looking to add an element of protection to their retirement strategy. Structured correctly, you can benefit from a consistent and reliable income stream during retirement; principal protection can allow for an increase in equity exposure and growth potential for the remainder of your portfolio; and you may even choose to add long-term care and death benefits.

Don’t count on your dinner companions — or even a TV personality — to fill you in on the many critical details. Take your time, review all the different contracts available and arm yourself with questions before you meet with your adviser. Then you can make an informed decision as to whether an annuity is appropriate for you.

Kim Franke-Folstad contributed to this article.

About the Author

Casey B. Weade, CFP®

President, Howard Bailey Financial Inc.

Casey B. Weade is president of Howard Bailey Financial Inc. in Indiana and author of the book "The Purpose-Based Retirement." Weade, a financial professional, hosts The Purpose-Based Retirement radio and TV shows in the Fort Wayne area. He earned the prestigious Certified Financial Planner™ (CFP®) certification in addition to being a Retirement Income Certified Professional® (RICP®). He is also an Investment Adviser Representative (IAR), as well as life, accident and health insurance licensed and Long-Term Care Certified.

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