6. Maintain Control – As mentioned earlier, one of the essential ingredients of a successful retirement plan is not only providing the income needed but ensuring that income never runs out.
Although annuities did offer the promise of a fixed amount of income for life, clients no longer had the ability to choose how these monies were invested nor access to anything other than their income.
Many of today’s annuities offer clients the ability to maintain total control over their assets, both during the accumulation and the distribution phases of their retirement, so they can still choose how and where to invest their hard-earned monies.
7. Maintain Access – Something also very important to most retirees is having access to their monies in the event that they need it. Although every retirement plan should include setting some monies aside for unexpected events or emergencies, sometimes life brings about severe changes that no retirement plan is fully prepared for.
Today’s annuities can also allow retirees the opportunity to access their monies during retirement, above and beyond just their income. Note: It is important to note that, depending on how each annuity is structured, there can be penalties if larger amounts of monies are taken out in the earlier years.
8. Full Transfer – Another common request among retirees is helping them to create a legacy. Therefore, it is very important for retirees to ensure that whatever monies are not spent will pass on to their spouse, heirs, and/or charities as efficiently as possible.
Annuities can offer several benefits to help with legacy planning. First, they offer a “guarantee of principal” feature. This means that assuming no withdrawals are taken, the full amount of what you put into an annuity is guaranteed to pass to your heirs – regardless of the investment performance of the monies. In addition, many of today’s annuities offer the ability to purchase an additional “rider” which offers the ability for a client to “lock in” and leave behind their highest annual value.
9. Professional Support – One could argue that retirement is a long and wonderful vacation. A time when someone gets to spend and enjoy all of the wealth they have accumulated over their working years.
Some of the most popular retirement activities include traveling, dining out, buying nice things, gifting, spending more money and time with families, donating, etc.
One of the last things many retirees should be focusing on in their retirement years is worrying about their money, their retirement plan, the stock market, and their income.
When you consider just about every important aspect of our lives, we have professionals out there to help.
Annuities are largely purchased through financial professionals. Although most annuities are owned on a non-discretionary basis (meaning no changes or investment decisions can be made by a financial professional without a client’s prior approval and consent), financial professionals can serve as a valuable resource by making themselves available for their investment opinions and recommendations.
10. Consolidation – Upon retirement, most clients’ preference is not to have lots of different accounts, nor do they wish to receive multiple statements from various companies. Having a consolidated financial life in retirement can not only lead to less stress and worries but also a greater success.
Most annuities have a large variety of investment options and mutual funds (which are referred to as “sub-accounts”), such as growth, growth and income, international, small-cap, mid-cap, large-cap, bonds, government securities, money market, etc.
Given this wide variety of investment options most annuities offer, they can serve as an excellent option to consolidate one’s retirement nest egg. This helps retirees to minimize the number of statements they receive, have the large majority of assets in a limited number of places, as well as have their income generated from a smaller number of sources.
Annuities are NOT For Everyone
Yes, annuities offer multiple features, benefits, and advantages, most of which other investment options simply cannot offer. However, we have all heard the statement that “anything good in life usually does not come free or easy”.
Annuities are very complicated investment vehicles, usually carry higher fees, and are clearly not the best fit for every retiree. My strong advice is to perform extensive research, review and understand all of your options, and of course, know your client – to determine whether an annuity is a good fit.
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