Annuities in 2019

Analyze ANnuity
We are about 1/2 through 2019 and you might be wondering how annuities are performing this year, and is 2019 the year you should invest your retirement into an insurance based annuity.   If you are in a hurry and want the quick answer… if an annuity makes sense, there has been nothing in 2019 to say anything has changed about the viability of an annuity.  

Why Buy an Annuity?

According to Selena Maranjian,  While investment accounts and retirement accounts can serve you well, they can fall in value whenever the economy slows down or enters a recession. That risk can keep you up at night. Annuity income, on the other hand, is guaranteed — as long as the insurance company behind it is solvent, that is, which is why you should only buy from top-rated insurers. 
Annuities can help prevent you from running out of money late in life, and if you’re worried about inflation eating away at your money’s purchasing power, annuities can address that risk, too. You can spend a little extra on your annuity (or accept a little less income) in order to have your checks adjusted over time to keep up with inflation.
A last consideration is that as we get older, we often have less interest in keeping up with our investments, and less ability to do so. Our cognitive abilities decline over time, whether we’re aware of that or not. Annuities relieve us of much of the responsibility for our investing decisions, letting retirees just sit back and collect annuity checks each month.

What is an Annuity?

According to Annuities are another type of financial product sold by insurance companies. Money that you put into an annuity is then used to provide you with monthly (or annual) payments. However, this is not a bank, where you deposit money and have a balance that must be maintained. An annuity is designed to provide you with additional money, but it’s a gamble.
  • Immediate Annuities are obtained by making a lump sum and you start receiving payments immediately. For example, if during your late 60’s, you took $110,000 and bought an immediate annuity, you could receive roughly $7,000 a year every year for the rest of your life.
  • Deferred Annuities are paid out at a time in the future, for example, when you retire.
Annuities can also be fixed or variable. Fixed annuities have a fixed interest rate for a specified period of time. Variable annuities are placed in a variety of stocks, bonds and mutual funds and the rate of return is dependent on the performance of those investments.

Some Advantages of Annuities

  • There is no annual contribution limit with an annuity. If you’ve maxed out your contributions with other investment accounts like your 401(k) or Roth IRA, you can invest as much as you want in an annuity.
  • Annuities are marketed as being safer (less risky) than mutual funds.
  • With a fixed annuity, the company assumes investment risks. Regardless of market performance, you are usually guaranteed a minimum interest rate. On the other hand, with a variable annuity, your returns might be higher than with a fixed annuity.
  • Fixed annuities offer fixed income — a sum that’s spelled out ahead of time, calculated, in part, based on prevailing interest rates. Fixed annuities are the simplest annuities to consider and they’re best for many people, too.

Have Questions?

If you are considering an insurance based annuity or have other questions concerning your retirement, please contact us and we can review your goals and accounts and put together a plan that will help eliminate risk and help maximize potential growth.  
Print Friendly, PDF & Email

Leave a Reply

Your email address will not be published. Required fields are marked *