Accumulating money is only one part of retirement planning. At some point, those assets may need to support income, preserve financial flexibility, manage market risk, and last through an uncertain number of years.
Annuities are insurance contracts that may help address some of those concerns when they fit the broader retirement strategy.
During your working years, market declines may be uncomfortable, but continued earnings, future contributions, and time may provide opportunities to recover.
Retirement is different. Withdrawals may need to continue even when markets are down, and there is no way to know exactly how long your income will need to last.
That is why retirement planning often requires a conversation about income, liquidity, growth, protection, and longevity together.
Certain annuities may provide contractually defined income options, including options designed to continue for life, subject to contract terms.
Certain fixed annuity contracts can provide contractual protection from direct market losses, subject to contract terms, withdrawals, surrender provisions, and the insurer's claims-paying ability.
Earnings inside a nonqualified annuity generally accumulate tax-deferred until distributed under current federal tax rules.
Certain income options may help address the financial risk of living longer than expected.
Certain fixed annuities provide interest-crediting approaches without directly investing contract value in the stock market.
Depending on the contract, remaining contract value or applicable death benefits may be payable to named beneficiaries.
The contract type determines how value may grow, what risks you assume, and which guarantees may apply.
Fixed annuities generally provide a guaranteed minimum interest rate, while the insurer may declare a higher current rate for specified periods according to the contract.
Fixed indexed annuities may credit interest based in part on the performance of a market index, while the contract itself does not directly invest in that index.
Some annuity contracts are designed primarily to create income, either immediately or at a future date.
Some expenses are predictable. Others are not. That is one reason I do not believe every retirement dollar should automatically be placed into an annuity.
An annuity may be useful for creating an income floor or protecting a portion of retirement assets, while other resources remain available for liquidity, growth objectives, emergencies, or legacy goals.
The appropriate balance depends on the individual.
Annuities can offer valuable contractual protections, but those protections may come with surrender periods, withdrawal limitations, rider costs, opportunity costs, and reduced liquidity.
The right question is not whether an annuity is “good” or “bad.” The question is whether a specific contract addresses a meaningful retirement need at an acceptable cost and with appropriate flexibility.
People approaching retirement who want to understand how a portion of accumulated assets may support future income.
People already retired who are concerned about income longevity, market volatility, or protecting a portion of retirement assets.
People who value contractual guarantees and greater predictability for a portion of their financial resources.
Moving money into an annuity can be a significant decision. Existing retirement accounts, tax considerations, surrender periods, income needs, liquidity requirements, and legacy priorities should all be understood first.
I do not want to begin with, “Which annuity should you buy?”
I want to begin with, “What problem are we trying to solve?”
The pre-assessment gives me context around your goals, timeline, current resources, and income concerns before our consultation.
Tell me about your retirement timeline, current assets, income needs, concerns, and what you want your money to accomplish.
We discuss income, liquidity, market risk, longevity, legacy, and other priorities.
If an annuity may fit, we review applicable contract features, guarantees, costs, restrictions, and available alternatives.
If you are approaching retirement or already there, start with the pre-assessment. We will look at the income you need, the assets you have, the risks you are concerned about, and whether an annuity belongs in the strategy.