Annuities may not be ideal for everyone. However, those seeking a lifetime income guarantee free of market risk might want to consider it.
Annuities are the only investment option that can provide a steady stream of income for life without exposing you to market fluctuations. Annuities are a reliable, flexible option to help with long-term care expenses, such as assisted living, home health care, and adult day care.
While it’s true that annuities aren’t suitable for everyone, some people will benefit from including one or more annuities in their portfolios to protect against market fluctuations and lock in gains.
Other benefits of annuities
- An annuity’s triple compounding and tax-deferred growth can help you grow your retirement savings more quickly.
- Some annuities offer higher interest rates than certificates of deposit and other safe investment vehicles.
- The majority of annuities have minimal or no fees.
- Lifetime income riders or annuitization may help reduce inflation and longevity risk.
- Some people who need to make more risky investments may discover that annuities give them the confidence to do so because they have a guaranteed income stream.
- Modern annuities are more flexible and can be made to fit your needs than ever before.
- Annuities have lower underwriting standards than permanent life insurance.
Annuities have some potential drawbacks, just like any other financial instrument.
- The majority of annuities are lengthy agreements between you and an insurance provider. Annuities aren’t a wise choice for people looking for quick fixes. If an annuity owner takes income from the annuity too soon, the IRS may levy an early withdrawal penalty.
- Once the contract has been annuitized, this decision cannot be reversed. However, including a “lifetime income rider” can prevent you from finding yourself in a bind.
- An annuity has very little liquidity. Only 10% of the contract value is typically accessible each year until the annuity expires.
- Market volatility may put your money at risk if you purchase variable or “buffer” annuities.
- You might not want an annuity unless you’re looking for protection of your principal, lifetime income, or you’re worried about outliving your savings or leaving your family a legacy.
- For those under 50, an annuity isn’t always the best choice.
- Without the assistance and direction of a professional, annuities can be complicated to comprehend.
- Expensive Riders: the most appealing features of an annuity are frequently added as riders that are completely up for grabs. Therefore, extras like lifetime payouts or a guaranteed minimum income may cost you more than anticipated. When combined with fees and commissions, a rider could dilute your investment even further.
Millions of Americans use annuities, a tried-and-true method for obtaining a steady, guaranteed income. Having at least one annuity in your retirement matrix can help you avoid using your other accounts or starting your Social Security payments too soon. The only product that can guarantee a steady stream of income for life is the annuity, but it is also the most complicated and has some unique benefits.
Many people may find annuities to be bad investments. The main drawbacks are: –
• long-term contracts,
• losing control of your investment,
• earning little to no interest, and
• high fees.
Annuities also have fewer liquidity options, and you must wait until 59.5 to make any penalty-free withdrawals from the annuity. Therefore, it’s crucial to consider each of these aspects before investing in an annuity and determine whether it’s a good fit for you. If you’re unsure, our team can assist you in deciding whether an annuity is a suitable investment for your particular financial situation.
Contact Information:
Email: [email protected]
Phone: 8668727470
Bio:
Mark Zimmerman, Sr currently is the Managing Member of Aurifex Financial Group, LLC. Aurifex Financials mission is to help clients realize their vision of living life on their own terms by providing credit repair, financial counseling, insurance solutions, and money lending services. This is accomplished by using a holistic approach. After hanging up his uniform after 22 years of service in the military, Mark still had a desire to help others, so he created Aurifex Financial.
As part of Accredited Financial Counselor (AFC) credentials, Mark had to obtain and document over 1000 hours of helping others which was accomplished by helping hundreds through a local non-profit. As an independent Insurance Agency, Mark is licensed in property and casualty, home, business, health, Medicare, life, and annuity products.
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