Annuities May Answer Many of Retirement’s Uncertainties

Uncertainty drives three common and worrisome aspects of retirement planning: How long will life last? How far will the money take us? How will the stock market – so integral in the asset accumulation phase – perform in the distribution phase?

Since retirement doesn’t include a crystal ball, investors can enjoy an element of certainty by adding a fixed income annuity to their retirement portfolio’s asset allocation. Fixed Indexed Annuities can offer features such:

1. Principal is preserved and not subject to devaluation, like occurred to market assets in 2008. Many present-day retirees don’t have the time to recover from another hit.
2. Gains are credited on anniversary dates and lock-in for the duration. The current year’s ceiling value becomes next year’s floor.
3. Annuities are issued and backed by insurance companies, not investment houses, and are based on decades of verifiable data confirmed by actuaries.
4. Income is lifetime guaranteed, even to 150 years, an age that noted European Gerontologist Dr. Aubrey de Gray believes will be attained by someone who is already alive.
5. Annuities fortify retirement’s lifetime income foundation, which is typically comprised of Social Security and employer-sponsored pension plans.
6. Provides predictable income and peace of mind in lieu of dividends. Concerns about uncertain rates of alternate assets’ rates of return are alleviated.
7. Fixed indexed annuities offer domestic and foreign indices, and not market investments like stocks or mutual funds. Tracking can be assigned to well-known indices like the S&P 500, used with more than 70% frequency. J.P. Morgan and Merrill Lynch are but two Wall Street firms that validate these indices.
8. Fixed indexed annuities can be a buffer against early or unanticipated asset drain due to poor stock market performance or poor sequences of return. Math proves that portfolios can be devastated by negative returns in retirement’s early years.
9. Annuities with a guaranteed lifetime income rider can specify even a modest cost-of-living allowance, something that Social Security failed to deliver in three of six recent years.
10. Annuity distributions are rooted in systematic math, and are not subject to the emotion of investors’ market timing or sell decisions.

Given the uncertain nature of life – and especially the retirement subset – retirees can benefit from the predictability of fixed index annuities that complement their standards for suitability and risk tolerance.