When Is an Annuity Right for You?

Yeah, and I’m going to shift a bit to talking about an annuity for income in retirement. That’s once you’ve gotten to that point and you’re saying, “Well, I want to have an annuity to generate a paycheck, to generate income, to generate money when you need it.” And generally, if you’re in good health, many annuities depend on how long you’re going to live. And if you are concerned about managing money and markets and volatility in the markets on your own, you don’t have a pension, those are all good indicators to us that you might want to consider adding a bit more what we call guaranteed income, almost like a floor.

Most of us have social security, and that’s a form of guaranteed income. It’s guaranteed by the U.S. government. That’s a floor of income. Certainly, that’s great to have. It’s a valuable floor of income. And then you can add to that annuity income, again, if you meet those criteria. You’re in reasonably good health. You don’t want to manage the risk of your portfolio on your own.

The other is if you’re what we call you’re not overfunded. You’re not someone who saves so much that they’re thinking about creating an endowment fund for their kids. You want to make sure every dollar lasts. So buying that annuity to generate guaranteed income can be very efficient. It’s a form of insurance. So if you live longer than average, you’re going to benefit. But not alone; In combination with the portfolio.

So it’s, again, not a if/then. It’s more of a yes/and. And that and, yes, an annuity makes sense as part of my plan. Again, those indicators may be ones that are a cue that you might want to talk to someone about adding one to your plan.