Why Choose an Annuity?
With the first wave of "Baby Boomers" approaching and entering retirement, society is experiencing the crest of what many are referring to as an impending "Silver Tsunami." This unprecedented volume of folks over the age of 65 is also entering retirement at a time of relative financial uncertainty. According to the Economic Policy Institute, retirement planning has declined even as Baby Boomers approach retirement.
Many of these new or soon to be retirees are seeing the value of adding annuities to their plan for a secure retirement. There are various types of annuities, and they can be complex. But the attraction of the annuity is that it provides a steady and measurable stream of income. In these uncertain times, where people are not entirely sure if they have built a big enough nest egg, that level of security is drawing more seniors, or soon to be seniors to annuities.
A lot of people just don't understand annuities, but these products are something we want to encourage people to at least look at. David Certner, Legislative Policy Director for AARP
The Administration, and well-known senior advocate groups such as the AARP, are asking those saving for retirement to consider both fixed and variable annuities. In a recent interview with the Associated Press, David Certner, legislative policy director for AARP said, "A lot of people just don't understand annuities, but these products are something we want to encourage people to at least look at."
Don't Outlive Your Income
The problem is, say experts like Certner, that while people may have done very well in planning for retirement with other tax-deferred products such as IRAs or 401Ks, not everyone anticipates accurately how long they will live, and what his or her retirement income and expenses really will be. Certner says that "outliving your income" is a growing concern among baby boomers.
Annuities are a great way to achieve some financial peace of mind for your later years, but they can be daunting. Always check with your financial advisor before entering into any annuity contract. One type of annuity that many are finding comforting when approaching retirement and feeling that they are coming up short is the immediate annuity.
With an immediate income annuity, you take a lump sum of money and invest it with an insurance company or other trusted annuities broker, and then immediately start receiving monthly, quarterly, or annual payments, for a specific period or for life, based on the annuity contract. These type of annuities are generally fixed, meaning they deliver a set rate of return based on a pre-determined interest rate, as opposed to variable annuities, whose rates of return are tied to the stock market or other investment exchanges.
You can learn a lot more about your annuities options by exploring our Annuity Learning Center guides and other valuable information on Annuities.org.