Why Your Advisor Is Talking to You about Annuities

Why Your Advisor Is Talking to You about Annuities

Why Your Advisor Is Talking to You about Annuities

Once thought of as a single retirement funding source, annuities are becoming part of a retirement strategy for many pre-retirees and those in retirement. Why? Because the reality of Social Security being at risk is a concern as our population ages. Annuities provide an income stream in retirement that you can’t outlive. Baby boomers are the largest population drawing Social Security benefits and there are not enough younger workers to support payments (and cost of living adjustments) for future generations. According to Pew Research, 10,000 baby boomers turn 65 each day.

Used to help offset volatile market performance in retirement, annuities are one way advisors are solving the challenge of their clients feeling confident they won’t outlive their money-no matter the market conditions. Advisors are using fixed annuities even more today than years ago as a way to bullet-proof the possibility of reduced (or no) social security payments and as source for clients to draw from when other retirement assets are at a low valuation. Advisors view annuities as an important component to retirement because of these additional features:

Annuities provide growth potential through features of their sub-accounts, which helps determine the performance (net of expenses) and the amount of money to be paid out. This unique feature helps to provide a level of growth and payment increases over time.

Annuities offer a tax advantage by allowing the owner to save more through tax deferral and off-set their income, and they have higher contribution rate limits than traditional pre-tax retirement savings accounts.

According to Ibbotson Associates, a research firm that provides information to insurance and financial companies and their advisors, annuities have the potential to outperform other fixed income investments and help smooth out the return in retirement portfolios.

If you have questions on annuities and how they may benefit you in retirement, I am a resource for you on annuities and the companies that issue them. My goal is to help you protect your retirement assets.

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