Tag Archives: Guaranteed Income

Evaluation of the Risks Associated with Annuities

Annuities have become a popular investment choice for those consumers who are close to reaching their retirement age. There are several reasons why annuities work for many consumers, as they allow for guaranteed income and have several safeguards in place to ensure that the consumer at least maintains a certain level of income once they have stopped working. However, there are also some annuity risks associated with purchasing an annuity, especially certain annuities, as there are a variety of different kinds of annuities currently available to consumers. In order for those consumers approaching retirement to make the best decision available to them, they must know both the advantages and disadvantages to purchasing an annuity in an effort to help them fund their retirement years.

While annuities do guarantee a level of income for a designated period of time that does not mean that the amount of money in question will remain constant over time. That is to say that annuities do not factor in inflation unless the consumer chooses to invest in an inflation-linked annuity. That means that with a standard or conventional annuity, the consumer may end up with less money over time, given the impact of inflation on their pension savings.  That being said, annuities are not all made equal. While the consumer can customize their annuity to some extent, these add-ons and enhancements typically cost more money. So, in order to alleviate some of these annuity risks, the consumer must invest more.

Another annuity risk is that the consumer simply does not have an opportunity to make much money on their investment. Therefore, they cannot continue to build their savings. For example, with a fixed annuity, the consumer is not able to make any money off of their investment. So while the consumer is guaranteed their income, they run the annuity risk of not ever being able to make more money off of their investment. Lastly, annuities are notoriously inflexible. This means that the consumer is unable to make any changes to their annuity, including payouts and enhancements, once the annuity has been purchased. Therefore, an annuity risk exists if the consumer finds themselves in a position where they need to change their retirement options.

Regardless of what the consumer needs and wants, they should always consult with an independent financial adviser. A specialist or expert can ensure that the consumer has all of the information needed to make the best and most unique decision for their particular situation.

Secure Your Family’s Future with a Guaranteed Annuity

Consumers can be faced with several difficult and challenging decisions as they approach their retirement years. For some of these consumers, the decisions to be made do not only affect them individually but also have an impact on their family, or beneficiaries. For some, investing in a guaranteed income can be the best choice to ensure that once they have passed away, their loved ones will still be able to maintain their lifestyle.

A guaranteed annuity operates in much the same way as a regular conventional annuity. That is to say, with a guaranteed annuity, an insurer agrees to pay out a guaranteed income to the consumer for a predetermined period of time, usually for the remainder of the consumer’s life. With a guaranteed annuity, the income is paid out for the entirety of the consumer’s life, but if the consumer dies and early death within the designated guaranteed period, the income is then paid out for the remaining balance of that guaranteed period, to the consumer’s beneficiaries.

The guaranteed annuity can work for nearly every consumer but is best matched with those consumers who are concerned with taking care of their loved ones, even after they have passed away. For this specific consumer, the guaranteed annuity can be the best choice. It also works best for those consumers who have been the breadwinners, or those who brought in the most income, for their families. For this specific group of consumers, their income has been depended upon and therefore, investing in a guaranteed annuity can ensure that income is still guaranteed.

This specific kind of retirement annuity, the guaranteed annuity, provides this extra and unique benefit to consumers. For those who are looking to take care of their loved ones, even after their death, a guaranteed annuity can provide the necessary safeguard for families. Because each consumer has different needs, it is important to get independent financial advice on which annuity is the best option and which annuity will provide the necessary coverage. However, for those who are looking to protect their loved ones, the guaranteed annuity is most often the best option. There is some kind of serenity and comfort associated with investing in the guaranteed annuity as the consumer is able to rest assured that their family members and beneficiaries will be taken care of, even after they have passed away.