You can think of annuities as insurance for your retirement. In simple terms, annuities are a contract between you and an insurance company in which you invest with an insurer a lump sum or a series of payments in exchange for a post-retirement payout as series of payments over time.
Annuities come in all shapes and sizes, depending on your financial need. Consequently, you can add benefits, options, and bonuses to supplement your income or add beneficiaries.
As with any popular financial option, there will always be people with a bone to pick because it doesn’t fit their schema of what financial planning should look like.
In the case of annuities, some of the biggest detractors are proponents of single investments who have a financial stake in the growth of that particular market. Therefore, you should always take what you hear about annuities with a grain of salt and not always believe what you see on TV. With that in mind, here are some of the most common annuity myths:
When it comes to saving for retirement, having several revenue streams is the best way to ensure your financial wellbeing. Like traditional IRAs, annuities offer tax-deferred growth, but unlike IRAs, annuities also come with certain benefits that guarantee reliable lifetime payment minimums or locked-in death benefits.
Annuities offer an added level of security to your retirement income that can be passed to your beneficiaries if you outlive your policy. As a supplement to IRAs and social security payments, annuities offer yet another pathway to financial security.
This is simply incorrect. There are several annuity options in the market, and although some, like variable annuities, do have some maintenance charges, fixed indexed annuities require no maintenance or annual fees to sustain. When people talk about annuity charges, they are often referring to additional options and riders that are not required to institute a policy.
We’d be lying to you if we said that annuities are not designed to be profitable for the carrier; after all, it is a business. However, we’ve found that those who’ve had bad experiences with returns on their annuities just did not have the proper guidance.
Just like investing, there’s a vast number of options. Therefore, having a financial advisor can help you avoid choosing incorrectly and maximize your returns.
You’re already in the right place! ABB Wealth Strategies is here to offer nearly 40 years of experience to guide you through the annuity process and empower you to make the best choice for a fruitful financial future. Get in touch with our team today to learn more!