5 reasons people purchase annuities

With options for a steady stream of guaranteed income, an annuity might be just the right financial vehicle to help a client stay on track with their retirement goals.

Or, it might not.

While annuities are a good choice for many people saving for retirement, they aren’t ideal for everyone. There are no hard-and-fast rules for recommending annuities as part of a larger financial strategy, but the following five criteria may be an indication that annuities are a good fit.

1. Your client is in relatively good health

In 2024, someone who turns 65 can expect to live another 20 years or more.1 One of the potential benefits of annuities is to guard against longevity risks, no matter how long a person may live.

Clients who are active and in good health may be better candidates for an annuity as part of their portfolios. An annuity may help a client maintain their standard of living throughout retirement by providing options for a guaranteed income for life, helping ensure they won’t outlive their savings. On the contrary, clients with poor health may be better served by other options.

2. Your client has enough money for immediate and short-term needs

Clients should factor in their financial needs over the next several years before purchasing an annuity. For starters, ask clients whether they have an emergency savings fund to help cover unexpected expenses.
Likewise, are there other short-term expenses on the horizon that will need to be met, such as a new vehicle purchase, home renovations, or paying for a wedding or college tuition?

Over time, some annuities may have comparable performance to traditional market investments, while others may not keep up with inflation, stressing the importance of exploring various options, features, fees and the performance of each over time.

Of course, a combination of factors may need to align to determine whether an annuity is right for a client. And, given the variety of new annuity products available and the different ways they can be structured, there may be an appropriate product available today that wasn’t available a few years ago.

As an example, TruStage has a wide range of fixed annuities, variable annuities, registered index-linked annuities and income annuities that are designed for different client scenarios, and some can be customized to align with varying risk tolerances.

SOURCES
Article from TruStage
*Social Security Administration, Retirement & Survivors Benefits: Life Expectancy Calculator, 2024, January 15

Planning for retirement is a responsibility that should be taken seriously, and choosing the right retirement annuity can be a prudent decision. Retirement annuities, acting as personal pension plans, provide a guaranteed income for life, bringing a sense of financial security and stability to retirees. As with any financial decision, it is essential to consult with a qualified financial advisor to assess individual needs and make informed choices. By harnessing the power of retirement annuities, individuals can confidently embrace their well-deserved retirement, knowing that their financial future is in capable hands.

Talk to Hazard & Siegel when you need a comprehensive lifetime financial solution.