Use Variable Annuities as One Part of Retirement Plan

I just read an interesting Insurance News Net article by Tom Henske comparing your financial retirement plan to playing golf.  I like the idea, because I think many retirees can more easily relate to something like golfing a hole-in-one than they can to something like annuities.  In “Variable Annuities: Power ‘Clubs’ Score Hole-In-One Financial Plans,” Henske says that   your variable annuity is to your retirement plan what your golf club is to getting a hold-in-one.  It’s just one piece of the puzzle.

The first thing advisors need to do when considering an annuity for their clients is to look at the client’s age, health, and tolerance of risk.  Annuities are best for those who are older, healthier, and the type of annuity that is right will depend on their risk tolerance.  Those who review variable annuities know that they are not inexpensive products to offer, but their cost brings about great value for the investor.  An example in the article shows a variable annuity with 3% yearly fees that offers at least a guaranteed 3.6% annual return, higher if the markets perform well.

Longevity risk is very real as people live to 100 on a regular basis.  Annuities with guaranteed lifetime payouts help ensure that you will not run out of money if you live a long life.  Annuities are really the only investments that give you all the benefits of market participation, protection in down markets, tax benefits, and a relatively small investment.  Investors who don’t like a lot of risk can afford to allocate more money into equities if they have a variable annuity with the protection of a rider.  This could really be beneficial in a market upswing.  Used as one part of a retirement plan, variable annuities can help investors reach their retirement goals.

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