In today’s low-interest-rate environment, there are fewer fixed income alternatives for retirees seeking income. Rates on traditional staples such as CDs and money market accounts are at or near all-time lows. For retirees seeking income and safety, fixed income annuities are an alternative to consider. Annuities are backed by the claims-paying ability of the insurance company issuing them. Once thought of as only a standalone retirement income solution, annuities are now commonly recognized as one of many components of a retirement portfolio. Here’s why:
- Annuities protect during times of market decreases; withdraw from the annuity to avoid liquidating other accounts at low share prices.
- Fixed-income annuities purchase a one-time payment or period purchases. They are contracts purchased directly from an insurance company or a financial institution.
- Fixed-income annuities can be immediate, meaning payments commence at once or deferred with payments starting at a later date. Payment options can vary, including monthly or quarterly.
The advantages of a fixed-income annuity include:
- A guaranteed stream of lifetime income now or in the future.
- A way to add a fixed-income component to your retirement portfolio.
- They can be structured to provide income for your life and that of a spouse if applicable.
- The insurance company guarantees the payments.
- They can provide pension-like payments for those with no actual pension.
- You won’t outlive the payments.
Not all fixed income annuities are created equal or are all the providers of these products. We can help you decide if a fixed income annuity is right for your situation, and if so, which product is the best for your unique situation. Why not give me a call to discuss your financial situation and to see if a fixed income annuity makes sense for you?