What types of annuities are there?
- There are 3 main types of annuities…. Variable, Fixed, and Indexed,
- Fixed annuities provide a guaranteed fixed rate of return over a specified period.
- Indexed annuities are tied to the performance of a specific index. As the index grows the owner will receive a portion of the growth credited to their account.
- A variable annuity will have ups and downs that are based on the performance of the underlining investment, like a mutual fund or index fund.
What are the different ways that annuities could fit into my retirement plan?
- Some people use annuities to provide a guaranteed income stream in retirement.
- Other people choose annuities for their tax deferred benefits.
- Many like the idea of an annuity because it can decrease one’s exposure to market volatility.
What advice does Ryan have for people looking to plan for retirement?
- Make sure that you work with a specialist that can guide you on the different strategies available to someone who is getting ready to retire.
- There are many annuity options available, so make sure that you do your homework to select the right fit for you.
- Make sure your plan is designed so that it can withstand the ups and downs of the market as well as provide a guaranteed income stream in retirement.
Today, Ryan receives a question from a viewer regarding different types of annuities that she has come across, and how they would best suit her situation as she prepares for retirement. Ryan states that there are many different types of annuities that are designed to do many different types of things. Variable annuities can carry a lot of inherent risk and could potentially have very high fees within them. Ryan makes it clear that he does not deal with these types of annuities. Another type of annuity that is very common is a fixed annuity. The fixed annuity guarantees that the annuity owner receives a fixed rate of return, over a stated period. These types of annuities can be a good alternative to putting money in a savings account or CD, because in most instances they will provide a higher rate of return. However, in most cases the annuity will have limited flexibility in terms of accessing the funds. The last annuity that Ryan goes over is the fixed indexed annuity. These types of annuities can provide people a way to decrease the risk in their portfolio by having some guarantees against a market crash. These annuities are linked to an indexed option and will receive a portion of the growth of the underlying index. Many people choose many annuities for all different types of reasons. Some are looking for a guaranteed income stream to last throughout their retirement. Others are looking to decrease their overall exposure to the markets. Regardless of what your goals are for retirement it is very important to work with a specialist who can align you with the proper tools that will help you meet those goals.