In a 2017 Nationwide Retirement Institute survey, financial Advisers revealed some of the primary concerns of today’s pre-retirees, including maintaining their current lifestyle during retirement. These people also are less concerned with growing their assets; instead, they are focusing on drawing them down in a disciplined strategy without taking out too much too early — and potentially running out of money. This often means transferring assets out of high-risk investments and putting them into more income-oriented vehicles.
With this in mind, annuities have become a popular go-to strategy for a portion of a retiree’s nest egg. With an annuity, you can determine how much money to use to purchase an annuity contract based on how much income you’ll want to receive from that source during retirement. Annuities can also provide a steady and reliable income stream, which is very helpful in retirement planning. It’s important to remember that annuities are designed for long-term needs and that they may be subject to fees, surrender charges and holding periods, which vary by company.
Because annuities are insurance products that require understanding, it’s a good idea to work with an experienced financial Adviser to determine which type of contract best suits your particular needs. It can become your personal income stream, wherein you decide how much money to commit now for a guaranteed income in the future. Also, be aware that an annuity income stream is guaranteed by the financial strength of the issuing insurer, not the government. As always, we’re here to help you evaluate whether an annuity is appropriate for your situation
The good news is that today’s annuities offer a wide spectrum of features and benefits to help customize your income stream. For example, some offer riders that provide payout options for a terminal illness, chronic care, disability and even unexpected unemployment. Some annuities guarantee a return of your premium. These riders are generally optional and may require an additional fee, and they may not be available on all products.
Another way to benefit from an annuity is to use it as a wealth-transfer vehicle. For example, fixed annuity income isn’t taxed until it is distributed. If you preselect a payment stream for a loved one, he or she can receive the income throughout a period of time to avoid a large tax liability as the result of a one-time, lump-sum death benefit.
Because they offer options for reliable lifetime income, annuities remain a popular option when
creating an income plan for retirement assets. The following are some recent insights discovered by LIMRA Secure Retirement Institute’s 2017 Annuity Buyers Metrics study:
- Annuities appeal to pre-retirees and retirees by addressing three major retirement income goals: asset accumulation, preservation of principal and predictable retirement income.
- Individuals typically buy a guaranteed income annuity at or in retirement when they are at the peak of their income years or accumulated assets.
- 80 percent of retiree households (with an annual income of at least $35,000) that own an annuity have more than $100,000 in investable asset
Content prepared by Kara Stefan Communications.
1 Eric Henderson. ThinkAdviser.com. June 26, 2018. “Using Annuities To Prep Clients For The Next Recession.” https://www.thinkAdviser.com/2018/06/26/using-annuities-to-prep-clients-for-the-next-reces/. Accessed Aug. 22, 2018.
3 Rich Lane. Insurance News Net. June 2018. “Annuities Can Help Boomers Consider Wealth Transfer Plans.” http://www.insurancenewsnetmagazine.com/article/annuities-can-help-boomers-consider-wealth-transfer-plans-3491#.W32Swi2ZPyi. Accessed Aug. 22, 2018.
4 Jafor Iqbal, Todd Giesing.Insurance News Net. May 2018. “Buyers Look Past Marketing and Buy the Annuity’s Purpose.” http://www.insurancenewsnetmagazine.com/article/buyers-look-past-marketing-and-buy-the-annuitys-purpose-3475#.W32T4S2ZPyg. Accessed Aug. 22, 2018.
Advisery services offered through Lake Point Wealth Management, LLC, an SEC Registered Investment Adviser. Insurance products and services offered through Lake Point Advisory Group, LLC. It is important that you do not use e-mail to request, authorize or effect the purchase or sale of any security or to effect any other transactions. The information transmitted herein and any attachments or files transmitted herewith may contain proprietary, confidential and/or protected, non-public information, are covered by applicable state and federal laws and are intended solely for the use of the individual or entity named above as the intended recipient. If the reader of this message is not the above-named intended recipient, or his/her/its agent, be advised that any review, disclosure, dissemination, distribution or copying of this communication is strictly prohibited. If you have received this communication in error, please immediately notify the sender by telephone or e-mail and destroy the material forwarded in error. Nothing in this communication shall constitute an offer to sell or solicit any offer to buy a security or any insurance product. Recipients should be aware that all emails exchanged with the sender may be archived and may be accessed at any time by duly authorized persons and may be produced to other parties, including public authorities, in compliance with applicable laws.