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Annuities have received a bad rap over the years and, like the Roth IRA, seem to be misunderstood by many people. Annuities were originally created to solve a problem, and they do just that. They provide a lifetime income that you can’t outlive to people who want a pension-style income in retirement. The problem was that they had some significant drawbacks in the early days. Many people still believe that annuities are expensive and that you will have to give up all control of your money to an insurance company. And while that used to be true, it no longer is for most annuities. And like all products that have endured, they have evolved and gotten better over time. Modern commission-free annuities are no longer as expensive as they used to be, and many do not require that you relinquish control of your money or choice of investments. Insurance companies also no longer keep your money should you pass away prematurely. These are a few of the biggest advantages.
…that have been made with these innovative retirement income products. Because people are retired for 30-plus years now, having a guaranteed income that you and your spouse, if you’re married, cannot outlive can be very beneficial. This can also significantly lower the longevity risk in a retirement income plan. New annuities even have the feature that allows them to offer an income that has the potential to rise with the rising cost of goods retirees need every year. Annuities, like any products, may not be right for everyone, but they are worth learning about and considering within the context of a comprehensive retirement income plan. Having an open mind about these new innovative products may be in your best interests. Recent studies even show that people who have annuity income as part of their retirement income plan have more fun in retirement and live about two years longer than those who don’t.
