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LEARN MORE ABOUT: Retirement Annuities
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As you approach retirement age, it’s natural to feel a sense of anxiety and uncertainty about your future finances. After all, you’ll no longer have a steady income from work, and you’ll need to rely on your savings and investments to generate enough income to cover your expenses. One option that many people consider is a variable annuity, which can provide a steady stream of income throughout retirement while also offering some flexibility and potential for growth.
Here are a few reasons why I’d consider a variable annuity as I near retirement age:
1. Guaranteed income: One of the biggest advantages of a variable annuity is that it provides a guaranteed income stream for life, no matter how long you live. This can help alleviate some of the anxiety around running out of money in retirement, as you’ll have a steady stream of income that you can count on regardless of market conditions.
2. Tax-deferred growth: Another benefit of variable annuities is that they offer tax-deferred growth on your investments. This means that you won’t have to pay taxes on the gains in your account until you start taking withdrawals. This can be especially advantageous if you have significant pre-tax savings in your 401(k) or IRA and want to diversify your retirement income streams.
3. Flexibility: Variable annuities also offer a degree of flexibility that can be appealing to retirees. For example, you can usually choose from a range of investment options, which can offer different levels of risk and potential returns. Additionally, many variable annuities allow you to adjust the amount of income you receive each year based on your needs and circumstances.
4. Potential for growth: While variable annuities do come with some risks, they also offer the potential for growth over time. If you choose the right investments and the market performs well, your annuity account value could increase significantly over time, giving you more income to work with in retirement.
Of course, there are also some downsides to variable annuities that you’ll need to consider before making a decision. For example, they can be expensive, with fees that can eat into your investment returns over time. Additionally, they’re not very liquid, meaning that it can be difficult to access your funds if you need them for unexpected expenses.
Overall, though, a variable annuity can be a good option for retirees who are looking for a steady stream of income in retirement and want some potential for growth in their investments. As with any financial decision, it’s important to do your research and consult with a financial advisor to determine whether a variable annuity is the right choice for your situation.
I am 55 and my financial advisor is suggesting the Jackson "Lifetime Payment" variable annuity, which starts payments in 10 years. I am considering it because I am also concerned about market downturn, as you are in this video. He says the annuity will substitute the bond portion of my 401k which will be under pressure as interest rates rise.(?) However, I already have a pension but must also plan for the runaway inflation that our lovely Fed is creating. How much of a percentage of a 401k would you suggest in the variable annuity? The heavy fees do have me reticent about pulling the trigger
"Growth is secondary in retirement." The hardest thing I have in dealing with retired clients is they won't stop trying to grow their retirement accounts! Refuse to spend it or try to go extremely risky to increase their holdings to keep up with some other friend of theirs. I mean it's crazy. I have seen some want to start flipping houses or day trade crypto! Refused to invest till they were 50+ but now all the sudden want to be wolf of wall street lol
https://www.youtube.com/watch?v=4ap3uzscHdo
Would you consider an indexed annuity rather than a variable annuity with a similar income rider? And why or why not?
Best explanation of an annuity I’ve heard including from my own financial advisor.
Learned something from your video Josh. Thanks for sharing!
The cash value will never double. After 13yrs my initial 101,800 got to a whopping 144,00. I wouldn’t have lived long enough for it to double. Viable annuities are a scam.
I had an Ameriprise variable annuity for the last 13yrs. Finally cashed it out. Made 2.3% on it. What a piece of crap.
I have an annuity. Variable interest rate. Considered life insurance. I’m with great western. The rate has a floor which we are at now with these very low current rates. I have no fees and only pay tax on interest money. All the money I put in is post tax so no tax on principle. Mine is much diff than the one he is using as an example
Great explanation of someone nearing retirement protecting the downside using a variable annuity with an insurance rider
Question: would you take a lump sum pension or would you take it as an annuity? At 62, it is around 1.2M lump or $5550/month with a 50% survivor benefit? I am leaning towards lump but not easy decision. I’m 58 now.
Thanks for your report! Could you kindly do a report on inflation-protected annuities?
I wouldn't recommend any deferred annuity until Social Security is delayed until 70. Delaying Social Security is the best deferred annuity available. After delaying Social Security, this could be an option for bucket #1 or bucket #2 (in a 3-bucket portfolio).
This is for people without a pension. You buy one of these to cover your basic bills and leave the rest of your money in the market in whatever mix your comfortable with.
5% single means 20 years to get my own money back to break even- I’d be 85 years old. Joint life is even lower %. I love the concept if rates were higher but reality is like you said unlikely to get market step ups once income starts. Many have restrictions to keep sub accounts from getting to heavy in equities. Makes sense for some people but for myself I’m lucky I think I’ll have enough social security and pension to cover my necessities and the portfolio will be the fun money which I can be flexible in using and delay in a down market if necessary
This Guy is as fake as they Come!
Oh well I rather own the salt of the earth than paper, metals ect ect
The 7% guaranteed growth with the 10 year hold and a 5% distribution rate on the income value for a 60 year old is actually pretty good in today's low bond yield environment
These numders have not changes much in the last 12 years some companies will even offer an 8% bonus on your initial contribution that will go towards the income rider.
Fee based maybe. Production goal reward is the clincher. "I dont get paid commission, just this fee"… except for what happens when I hit a target. I'm listening though, because ai otherwise stay away from annuities
It is good to diversify your retirement money.
It is interesting. What happens if the person dies after a few years collecting the annuity payments?
Why would you take an annuity with those payouts when you can construct a dividend portfolio that pays as much with dividend stocks that increase payouts every year above the rate of inflation?