According to Karen Hube’s article “Best Annuities” in Barron’s, annuities will take away the worry that many retirees have about outliving their money. Barron’s has picked 25 of the best annuities to highlight in their article. As Americans saw half or more of their stock portfolios disappear in the stock market collapse and volatile market of the past 3 years, those with annuities were sitting pretty with little to no worry about how they would live in retirement. Annuity critics used to say that paying more for protection from down markets and guaranteed payments was not worthwhile, but that opinion is rapidly changing as more advisors recommend annuities to their clients.
Barron’s divided their 25 best annuities into the following 5 categories; the lifetime immediate fixed annuity, the 10-year certain immediate fixed annuity, the deferred fixed annuity with a 5-year guarantee, a capped S & P 500 indexed annuity, and a deferred variable annuity. See the Barron’s article for the detailed top 25 list. They used three measures to determine their best annuities. The returns, costs, and insurance company strength were carefully researched for each deferred and immediate annuity product. One of the reasons that longevity risk has become so much more worrisome is the increased life expectancy and retirement period for Americans. An average retirement in 1930 lasted 3-7 years because people only lived to around 60. Retirements now last for decades, just as traditional pensions rapidly disappear. Annuities are the product to hedge against that longevity risk.
Some of the past worries about annuities, such as losing the money if you died early, not leaving anything to your heirs, and losing liquidity have been addressed by insurance companies with a number of rider options to give you the investment you desire. A deferred variable annuity is the most popular of the more than 1,600 different annuity options. Not everyone thinks that variable annuities are the best choice, some say that an immediate fixed annuity is the safest and purest annuity product. Regardless which of the best annuities you are interested in, make sure to speak with an expert and look into exactly which product is the best for you and only you.
