
Are Annuities A Good Investment Option For Your Retirement?
If you are about to retire or already retired, chances are you've been approached or hear a pitch by an Annuity Salesman. (I'm referring to after market annuities in this blog. Not a pension annuity. For info on Pension Annuities click here).
Annuities come as fixed, variable, guaranteed, indexed, 10 year, 5 year, etc... but the sales pitch is usually the same. Let me guess. They pitches the product as no risk, safe money, only get market upside, lifetime income, death benefit, etc, etc....So you are probably wondering are annuities a good investment?
Let's address that statement right now. Annuities are NOT an investment. Say it with me. Annuities are not an investment. One more time. Annuities are not an investment. Now that we are on the same page exactly what are annuities?
What Are Annuities?
Annuities are Insurance Products sold and backed by Insurance Companies. I repeat. Annuities are an Insurance Product sold and backed by Insurance Companies. Is this bad??? Not necessarily. Annuities can serve a purpose in retirement depending on what your goals are. Used in the right situation they can be helpful. But again they are not investments. They are Insurance Products.
Think of why you buy insurance for anything? You buy insurance because it transfers risk from you to the Insurance Company. That's it. Same with an Annuity. You buy one because it transfers risk from you to the Insurance Company. The Insurance Company promises you a "safe" return with no risk. Who doesn't want that? But is it a good idea for your entire retirement portfolio? Would you ever put all your eggs in one basket? The answer is NO.
At 80/20 Financial Services, we believe annuities can serve a place in your retirement portfolio. But not as your entire portfolio. We believe that real wealth, an income one doesn’t outlive, can only be achieved through a program of lifetime investing in quality companies.
You Need A Plan
A goal of retiring - without a plan to get there - is simply a plan to never retire. Retirement isn't some magical age. It's a dollar amount. If you're age 50 or over and still in the accumulation phase (pre-retirement) we can help you figure out where you need to go and how to get there. If you are retired or nearing retirement, we can create a plan which will outpace inflation and possibly leave a legacy to your family. The consultation is free and without obligation. Contact us to set up a consultation.
For more articles about retirement planning and investing click here.
Thanks for reading!
Brian Coleman/Retirement Income & Investment Planner
80/20 Financial Services is an independent Registered Investment Advisory Firm. We help clients age 50 and over plan their retirement income and investment strategies. Every week we write a blog for people just like you. Subscribe here.