Today we’re talking fixed annuities!
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As more and more people approach retirement, the question of financial security becomes more pressing. For many, a fixed annuity can be a valuable option to consider. A fixed annuity is an insurance contract that provides a guaranteed payout and interest rate over a set period of time. These annuities are typically purchased with a lump sum and are often used as a way to supplement retirement income.
But is a fixed annuity worth it in retirement? The answer to this question will depend on a number of factors, including your financial goals, the amount of money you have to invest, and your overall risk tolerance.
One of the primary benefits of a fixed annuity is that it provides a guaranteed income stream for the rest of your life. This can be especially beneficial for those who are concerned about outliving their savings or who want to ensure that they have a reliable source of income in retirement. Fixed annuities can also be useful as a way to diversify your retirement portfolio and protect against market volatility.
However, it’s important to note that fixed annuities come with some downsides as well. For one thing, the returns on these investments are often lower than other types of retirement investments, such as stocks or mutual funds. Additionally, once you have purchased a fixed annuity, your money is tied up and you may not be able to access it without significant penalties.
When deciding whether or not a fixed annuity is worth it in retirement, it’s important to consider your personal financial situation and goals. If you are looking for a secure source of income in retirement and are willing to accept lower returns in exchange for that security, a fixed annuity may be a good option for you. On the other hand, if you are looking for higher returns or want more control over your retirement savings, a fixed annuity may not be the best choice.
Ultimately, the decision to invest in a fixed annuity will depend on your individual circumstances and goals. If you are unsure whether a fixed annuity is the right choice for you, consider speaking with a financial advisor or retirement planning professional who can help you evaluate your options and make an informed decision about your retirement investments.
What happens when the annuity company goes out of business ?
I was told that insurance companies want you to start drawing monthly payments from your annuity, is this true?
Fixed life annuity is a good way to guarantee retirement income when you are old and can't work anymore that makes you have no worries during a down market. However, he doesn't mention most major insurance companies will only allow fifty percent of your nest egg to purchase annuity this allows the other portion to be invested for growth. I can live off of the annuity income and Social Security very comfortable and have no worries and my retirement is four years away.
My father left an annuity for us, his three sons. He mentioned it to me some 6 or maybe 7 (or more years ago) he told me the initial amount and I received the annuity payout this year. The annuity he purchased earned $15,222 (tax free) in those years. I’m pretty sure he said it should pay 3% and I’m guessing that was before tax. In the last 5 years my investment accounts have gained 9.51% and in 10 years 9.04%. That does include the last 12 months which have been bad, and I’ve seen nearly a half-million disappear. If I were young I’d definitely avoid an annuity, TIME IS ON THE YOUNG INVESTOR’S SIDE, get in, STAY IN and stick to a plan. Also, diversify. My wife and I were good at saving but waited to invest until we were 50 or so. I’m now putting the cash from the annuity into a CD product which should pay 4% before taxes. (my 2¢).
Right, so will you be willing to give up the 1% annual charge on all the money in the account, every year. But when the account loss 30% in the market, you still charge 1%. And you told me you are not after people's money. Come on. Be real and be honest.
I own 3 MYGA’s- no risk over 4 percent interest- I/m/o a good bond replacement
I done really well with my 7 year fixed index annuity. Now I have put it into a 5 year fixed index annuity. I am tired of the Yo-yo effects of the stock market the last several years.. Up one day, down the next. back to where you was. Over and over… I like this going up and never down myself… A 3% gain is way better than a huge drop in the markets.. My .02 cents.
Fixed annuities the worst vehicle out there similar to whole life insurance
Never! Fixed annuity equals fixed low return. Stay away!!!
I have a 3 percent fixed in my 403 b .seven year surrender period that’s finished.i max it out .I also max out my 457 all stocks .I also max out my Roth all stocks .any advice.
Thanks Eric good advice
Any thought on a QLAC, starting at a much older age say 80-85, I’ve also heard it called a longevity or life annuity. Basically a way to have some longevity “insurance” without having to keep a bunch of money in your portfolio. Thus, one can plan to spend down most assets by 85. It really bothers us to not be able to spend most of our portfolio while we can still enjoy it, but obviously need to protect the surviving spouse after the first person dies, since one social security check goes away. We have about $1.7 million in portfolio and no debt (age 63/65)
Annuities are silly for 95 percent of the population.
Did you remove the dividends from the annuity? The index would compound dividends, annuities not only have the fees (usually much higher than 1% especially if any "benefit" is added), lock in period, but also get no dividends.
I always saw an annuity as an insurance product and not really an investment. We all know that with risk comes rewards. It's not good for all cases but may be reasonable for some to bridge the gap or to help cover floor expenses. I would stay away from the fancy products and just stick to the basic DIA or SPIA. If you can use guaranteed income to cover your basic expenses, I'm not sure why you wouldn't do that. Once you win the game, you stop playing.
I have been just shown a Inventor Buffered outcome ETF that sounds like a annuity this is a one year. I am not sure what to think about this fund
Erroric, Another good one. I thought about that for about 10 minutes on Monday. You just solidified my thoughts on it.
Dumping it ALL into VTI!! All $500. Lets get rich!
Who gets to use Aladdin? I want to learn that. Also Jazz Finance is very undervalued. There is a lot of GREAT content and educational information in your shows. They are very much appreciated.
Instead of a fixed annuity in retirement, why not put (some of) your lump sum into QYLD or XYLD? Every month you get dividends equivalent to one percent of your principal, and you get to keep all your money, and the management fees are 0.60%.