Broker Check

Avoid These Annuity Mishaps

| November 07, 2018

In retirement, annuities can be an essential part of your income strategy. They can provide guaranteed income for as long as you live, and are often a great way to supplement income from the likes of a pension or Social Security. However, that doesn’t mean there aren’t pitfalls you can find yourself in when it comes to annuities. Be on the watch, and avoid these annuity mishaps in retirement.

  1. Picking the wrong payout type. With immediate annuities, you’ll usually get the highest payout if you get a single-life version. The problem with this version, is if one spouse passes, their income will go away. That’s why it may be best to play it safe with a lower payout option that will continue on after death.
  2. Not comparing payout amounts. Always compare! There’s a surprisingly large range of payout, so make sure you know what you’ll be getting based on your age and payout type. Consult with your advisor to compare payouts from different insurers.
  3. Investing too much money. Annuities aren’t the most flexible, so it’s important to know what you’ll be getting up front. They return a lot more than interests on fixed investments such as CDs, but immediate annuities’ payouts are a return of your principal. That’s why it’s generally a good idea to invest no more than 25-30% in an immediate annuity.1

There are many more annuity pitfalls, and we can help you avoid them. Give us a call and we can find the best annuity products that fit your retirement needs.

The content within this document is for informational and educational purposes only and does not constitute legal or tax advice. Customers should consult a legal or tax professional regarding their own situation. This document is not an offer to purchase, sell, replace, or exchange any product. Insurance products and any related guarantees are backed by the claims paying ability of an insurance company. Insurance policy applications are vetted through an underwriting process set forth by the issuing insurance company. Some applications may not be accepted based upon adverse underwriting results.

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