- 3-Minute Video
- Jan 31, 2018
How Annuities Can Add Stability to a Retirement Portfolio – Part 1
Income and fixed annuities offer protection and income guarantees.
What is one of the top concerns as people get close to retirement? For most, it’s having enough money to last the rest of their lives.1
Although Social Security benefit payments provide a stream of income, chances are it won’t be enough to cover all expenses throughout retirement. Many will need to cover the rest from retirement savings.
So how do you make sure a portion of those savings will last a lifetime as well? That’s where annuities come into the picture.
Annuities are one of the only financial products that can protect a portion of savings by turning it into a steady, guaranteed stream of payments to supplement other retirement income for as long as a person lives. That steadiness can add some stability to a portfolio.
While there are several types of annuities, this video will focus onincome annuities and fixed annuities.
When someone purchases an income annuity, the insurance company agrees to pay them a steady stream of income for the rest of their life. No matter how long they live or how much financial markets fluctuate, income is guaranteed and protected from any market loss. An income annuity can be selected based on when payments begin.
- An immediate income annuity is purchased with a single purchase payment, and guaranteed income begins right away.
- A deferred income annuity is purchased now with a single or multiple purchase payments, and guaranteed income payments start in the future on a date you select.
Regardless of the type of income annuity chosen, the payments can be guaranteed for a lifetime.
Like income annuities, fixed annuities also protect a portion of savings and can provide a stable, guaranteed stream of income that can last for as long as someone lives.
But as its name suggests, a fixed annuity also provides growth based on a fixed, pre-set interest rate that’s guaranteed for a certain number of years.
And while the interest earned may be lower than what the stock market could provide over time, funds aren’t exposed to the markets, so they can grow at a steady rate without being subject to volatility.
To learn more about how income annuities and fixed annuities can help protect a portion of savings and provide stable lifetime income, talk to your financial professional.
For information on how variable annuities and index-linked annuities can add some protection to a portion of a financial portfolio, watch How Annuities Can Add Stability to A Retirement Portfolio – Part 2
To better understand different types of annuities and related terms, download the Annuities Language Glossary created by Alliance for Lifetime Income, a nonprofit educational organization committed to making the language of annuities simpler.