There are many different types of investments that seek reliable income, including annuities. Most annuities are intended to provide income that is guaranteed. This means that no matter what happens to the markets — whether real estate, the stock market, or otherwise — a stable annuity income would still be available. Any guarantee is based on the claims paying ability of the issuing insurance company.
Shifting investment strategy from growth to preservation
Throughout our lives, we often focus our investment dollars on those opportunities that we feel will generate the best return for us. With most risky investments, though, there are times of growth potential and times where it will fall due to a declining market.
At some point many investors shift their investment strategy from growth to preservation. This strategy seeks to ensure that one day we can draw from those funds each month to support our lifestyles during our retirement. This is the time to ask your advisor, is an annuity right for your long term plan?
Since the market value of a variable annuity is subject to fluctuation, keep in mind that the amount of income you draw can be negatively affected, but may seek to provide a minimum income benefit. An annuity is a contract between an investor and an insurance company. The investor makes a payment or series of payments to the insurer, and the insurer guarantees specified distributions to the insured. For purposes of this blog, we are covering variable annuities with an optional guaranteed income rider. (Riders are additional guarantee options that are available to an annuity or life insurance contract holder. While some riders are part of an existing contract, many others may carry additional fees, charges and restrictions, and the policy holder should review their contract carefully before purchasing.
Recent market downturns are a reminder of the benefits of reliable income
We’re currently experiencing a market downturn amidst the coronavirus outbreak. Making now an excellent time to talk to your financial advisor, who can look at your investment portfolio and assess the impact that this market decline has had (or will have) on your retirement income. This will help you determine the level of risk that your money is susceptible to and the most suitable investments to consider.
Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.
Variable Annuities are suitable for long-term investing, such as retirement investing. Withdrawals prior to age 59 ½ may be subject to tax penalties and surrender charges may apply. Variable annuities are subject to market risk and may lose value.