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.

Man in a suit putting coins into a piggy bank.

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.

Common Annuity Myths

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:

If I Have a Retirement Account, I Don’t Need Annuities

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.

Having an Annuity is Throwing Money Away in High Fees

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.

Annuities Are Designed to Only Benefits the Insurance Company

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.

In Summary

  • Annuities are an excellent supplement to your retirement income, even if you already have a retirement account.
  • The fees you pay will entirely depend on your policy options and the type of annuity you select.
  • Choosing the right annuity with the proper guidance from an expert will ensure you get the most out of your choice.

Want to Learn More About Annuities?

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!