Is an Annuity Right for Your Retirement?

Jim and Linda retired at 65. They were nervous about how to balance income and growth, without running out of money in the process. They divided their savings into three buckets: immediate, soon, and later. The immediate bucket contained an annuity, providing them with a steady income for daily living expenses. This strategy allowed their long-term investments to remain invested, securing their financial future while ensuring present-day stability.

Sarah was recently widowed. After losing the lesser of two Social Security benefits, she was concerned about her ability to cover her essential expenses. She opted for an annuity that created a ‘floor’ of income, covering her living expenses, utilities, and groceries, as well as a portion of her lifestyle spending. This guaranteed income relieved her anxiety about market fluctuations affecting her ability to afford basic needs.

As Mark considered retirement he was weary of the possibility of retiring into a recession. When his time finally came, the market dipped and his fears were realized. Fortunately, Mark was able to rely on his annuity to serve as a buffer for income preventing him from having to withdraw from his investments at a potential loss. This strategy helped to preserve his portfolio by giving Mark back the benefit of time. This allowed his invested assets the opportunity to recover, keeping his plan on track.

After her husband, Bill, passed away unexpectedly, Pat felt lost. Suddenly her vision of retirement looked much different than she imagined. Despite the changes she was forced to face, her financial plan remained steady. Using the joint-life annuity they had chosen, along with a survivorship benefit from Bill’s pension, Pat’s lifestyle remained steady. This financial stability was crucial for Pat, ensuring she could successfully navigate a challenging time of uncertainty.

Doug and Emily, recently retired, were concerned about how to manage rising healthcare costs throughout retirement. They chose to dedicate part of their annuity income specifically towards their ongoing medical expenses. This strategic allocation ensured they didn’t have to worry about how they would pay for their healthcare needs, allowing them to enjoy their retirement without financial stress. Their annuity also offers the added benefit of providing increased payouts in the event that they experience a significant healthcare event in the future.

Laura, a conservative investor approaching retirement, wanted to stabilize her investment strategy in addition to the income she would receive in retirement. She decided to include an annuity in her asset allocation as a fixed income alternative. This choice provided her with a principle protected asset to help lessen her exposure to the stock market along with providing an additional steady reliable income stream. This foundation complemented her other investments, enhancing her confidence in her plan during retirement.

As Kevin and Rita approached retirement, they were faced with a decision regarding their Social Security benefits. Both healthy and active, with a history of longevity in their families, they were keen to maximize their Social Security benefits by delaying until age 70. The challenge was that they were ready to retire now. They incorporated an annuity bridge to help support their lifestyle in the initial years of retirement, allowing their benefits to receive maximum delayed credits. By doing so, they significantly increased their eventual benefits, ensuring a more robust financial foundation for later retirement years.

As George got older, he felt his priorities begin to adjust. He was very comfortable, and no longer concerned about the need for money. His focus shifted to the opportunity to leave a larger impact with the time he had left. George was able to take a portion of his assets and use them to create annual gifts to his church, and a handful of charities that he loved to support, reducing his tax burden in the process. George further enhanced his strategy by taking some of the required distributions that he was forced to take and used them to fund a life insurance strategy to leave a tax-free legacy to his children and grandchildren.