Locking down a solid retirement income plan in today’s volatile investment market can be challenging.
Some caveats to consider
When thinking about purchasing an annuity, you must take a few things into consideration. For one thing, you must realize that annuities are not FDIC insured. In addition, the quality, costs, coverage and terms of annuities vary by insurance company. So here are a few areas to focus on:
- The ratings of the insurance carriers
- Annual fees
- Length and ammount of surrender charges
- Death benefit
- Choices of payout options
Final thoughts
When you’re thinking about using annuities for income, keep in mind how to best integrate them with your other resources. A great strategy is to determine how much money you’ll need in retirement, purchase one of these products to be sure you have enough, and leave the rest of your money invested to grow.
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If the market cooperates, your net worth will continue to increase while you’re retired. And if it doesn’t, you’ll know your annuity, combined with Social Security, will continue to provide steady and reliable income.
Talk to a financial professional about whether this is a good time to buy the type of annuity you’re interested in, but don’t put it off for too long. I recommend buying within at least five years of your planned retirement age.
The guaranteed lifetime income for all parties to an annuity contract should give you the financial confidence that you will have adequate income to ensure a successful retirement.
Kim Franke-Folstad contributed to this article.
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