In The Coloradoan, James Watt stresses the importance of choosing your annuity plans wisely in “Financial planning: Properly chosen annuities offer lifetime benefits.” While it’s true that there are multiple facets to understand about annuities, unfortunately they are all too often misunderstood products. When the annuity and the purchaser are matched properly, annuities can provide income over your lifetime. Variable annuities have changed significantly over the past fifteen years and while they are more complex, they are much more useful and beneficial to the purchaser.
Their 4 more popular features are summarized here. A guaranteed minimum income benefit offers lifetime income at a guaranteed rate. With a minimum income withdrawal guarantee, the guaranteed minimum withdrawal benefit lasts for a predetermined fixed time period. A guaranteed minimum accumulation benefit guarantees that you will receive the amount of your original investment at the very least, at some point in the future. The advanced live delayed benefit delays the benefits you receive until an older age that is predetermined at purchase.
Annuities are great tools to cover the income gap: the amount of money to cover your needs in retirement versus the amount of money you will have coming in from social security or retirement plans. 401k annuities and other annuity purchases and rollovers can make the income gap nonexistent. There are many tools available to estimate how long you will live and how much income you will need coming in throughout retirement. Having a guaranteed income that protects against longevity risk without worrying about S & P 500 declines are the main benefits of an annuity.
