What if you ran out of money during retirement?

If the biggest fear you face is running out of money during your retirement years, then consider placing some of your retirement savings and accrued assets in an annuity. This investment category offers numerous options as to product types, contract structures and interest crediting methods.  It is the only product category that can guarantee your return of principal or guarantee you a monthly income for life.

In addition there are a variety of withdrawal features available on many of these products. These features are often flexible and some products allow for required minimum distributions and the ability to access your money for your own particular needs when you require it the most.

Consumer Alert:  Be aware that all annuity products are not created equal.  It is important to research products that meet your specific requirements. In order to make an appropriate decision you must become familiar with the policy provisions in advance of your purchase. This can be accomplished by requesting a “specimen policy” to review through your advisor prior to signing the contract application.

A specimen policy is an actual duplicate copy of the policy that will be issued to you once you sign an application and transfer your money. Be sure to request the disclosure of the financial strength and ratings of the company behind the product of your choice prior to making a purchase. Soliciting the assistance of a qualified financial advisor who is experienced, educated and specifically trained in annuities and their use for retirement income is essential.  

Annuities

Frequently Asked Questions

Q. Are there investment products that really guarantee the principal investment? 

A. Yes. There is a new generation of annuity products specifically designed to meet the growing demand of the needs of the pre-retirement and retirement population. Researching this product category is like entering a labyrinth, so do yourself a favor and seek the counsel of a qualified financial advisor that is well versed in annuities.    

Q. Who or what is guaranteeing my principal in these types of products?  

A. The standard industry disclaimer is that the principal (known as premium) placed in these products is “guaranteed by the claims-paying ability of the financial services company that issues the product.” In other words, the financial strength of the insurer behind your investment determines the quality of the guarantee. Choose carefully. This is another area where an experienced retirement advisor will add great value to your decisions by researching and identifying products and highly-rated companies.  

Q. Are annuities a good idea?

A. The rule of thumb here is this: if you do not have time to earn back a potential loss of principal, it only makes sense that you would consider having some percentage of your principal protected.     

Q. Are the fees and sales charges for these products high?  

A. Most annuity products are structured so 100% of the premium deposited goes to work for you immediately. Annual fees are not the norm. Please request full disclosure regarding any commissions or sales charges that may be calculated into the product.  

Q. How are sales charges or fees or commissions structured in annuities?

A. Annuities have surrender charges. The fees, commissions and sales charges are taken into consideration through a complicated actuarial computation and are reflected in the length of the surrender charges. Your initial deposit is called a premium and goes to work for you immediately however there can be significant restrictions on when and how much money you can withdraw.   

Q. Where can I get an annuity? 

A. Insurance companies and only insurance companies can create annuities. Insurance companies have a different distribution system than the mutual fund companies or wire houses which carry stocks and bonds. Annuities are designed for the preservation and distribution phases of retirement and historically are used for income planning. All annuity products are sold by state-licensed agents/registered representatives.