Is an annuity right for you?

June 25, 2017|

In planning for financial security in retirement, an annuity can satisfy two basic objectives:

  1. To accumulate retirement assets on a tax-deferred basis: If you’re already contributing the maximum to IRAs and any employer-sponsored retirement plans and need to save more for retirement, a deferred annuity may be the answer to your retirement savings need.
  2. To convert retirement assets into an income that you cannot outlive: On the other hand, if you’re near or at retirement, an immediate income annuity can be used to convert existing retirement assets into a lifetime income. An annuity is a long-term savings plan that can be used to accumulate assets on a tax deferred basis for retirement and/or to convert retirement assets into a stream of income.

While both are insurance contracts, an annuity is the opposite of life insurance:

 Life insurance provides financial protection against the risk of dying prematurely.

 An annuity provides financial protection against the risk of living too long and being without income during retirement.

If you are already contributing the maximum to an IRA and/or an employer-sponsored retirement plan, an annuity can be an excellent way to save for financial security in retirement.

Leave a Reply