Let’s Talk Annuities — What’s Right for You?
Lately, you might have seen flashy ads promising 20% bonuses, doubled income for life, or long-term care benefits from annuities. And while there may be a sliver of truth in some of those claims, they often leave out critical details.
That’s where I come in—to help you focus on the real value of an annuity based on your unique goals, not sales gimmicks.
There’s No One-Size-Fits-All Annuity
The truth is, there’s no single “best” annuity. Each type serves a different purpose depending on whether your top priority is:
- Guaranteed lifetime income
- Market-free growth
- Principal protection
- Legacy planning
- Long-term care coverage
Let’s walk through the major types and where they might fit in a retirement strategy.
1. SPIAs (Single Premium Immediate Annuities)
Suppose you’re looking for guaranteed lifetime income and no longer need access to the money. In that case, a SPIA might be an option. You give the insurer a lump sum, and they pay you a set amount monthly, often for life.
But:
You give up control of the money. That trade-off isn’t for everyone, and we’d need to be sure this approach fits your overall financial picture.
2. MYGAs (Multi-Year Guaranteed Annuities)
Think of a MYGA like a CD, but typically with better rates and tax deferral. It’s simple, predictable growth with zero market exposure.
MYGAs work well if:
- You want a safe, fixed return
- You’re parking money short- or mid-term
- You’re planning around taxes
3. Variable Annuities
These give you market exposure, which means potential for higher growth, but also higher risk and higher fees. These are rarely our first choice unless we’re solving for a particular need (like tax deferral in a non-qualified account).
4. Fixed Index Annuities (FIAs)
Fixed index annuities are a favored annuity type for a reason. You’re not in the market, but your growth is tied to how an index (like the S&P 500) performs. You can gain when the index rises, but you won’t lose if it falls.
Why do many clients choose FIAs:
- Principal protection
- Moderate growth potential
- Often include optional income riders
- More flexibility than SPIAs
5. Income Riders: Building Your Pension
Many fixed index annuities offer optional riders that can turn your contract into a predictable income stream later in life, without giving up control of your money.
There are several types of riders:
- Flat-Growth Riders
Small fee, but guaranteed growth regardless of market performance. Popular for reliable future income. - Market-Linked Riders
No fee, but your income account only grows if the index performs well. More volatile. - Income Doubling Riders
Some double your income in specific situations, like confinement to a care facility. But remember: this is not true long-term care coverage. - Daily Accumulation Value (DAV) Riders
Tracks the highest daily value of your account and locks it in—even after income begins. Great for legacy and growth-focused plans.
Don’t Be Fooled by “Bonus” Offers
You might see contracts offering 10%, 15%, or even 20% upfront bonuses. These sound incredible, but they usually apply to a value that’s used only for income calculations, not something you can withdraw or walk away with.
Always ask:
“What am I guaranteed to receive, and what do I give up to get it?”
What’s Most Important to You?
Choosing the right annuity starts with your goals:
- Are you looking for guaranteed income later in life?
- Do you want to grow your money without market risk?
- Are you worried about running out of money in retirement?
- Is legacy planning a priority?
- Do you want access to the money in case of an emergency?
Once we answer those, we can narrow down the options that truly support your vision for retirement.
When it comes to annuities, there’s no “best one” for everyone. The right fit depends on your retirement goals, comfort with risk, and how much flexibility you want.
That’s why it’s important to compare options the right way—not just by looking at the biggest bonus or highest number on a brochure.
Here’s what matters when you’re evaluating annuities:
- What does the annuity actually do?
- How does it align—or conflict—with your retirement plan?
- What are the real guarantees, and what are the trade-offs?
- And most importantly, what are you giving up to get the benefits they’re offering?
It’s easy to get caught up in the hype, but good planning is about strategy, not sales.
If you’re thinking about adding an annuity to your retirement mix, take the time to step back, look at the whole picture, and make sure it supports the lifestyle you want, not just now, but 20 years from now. We can help. Let’s have a conversation today.
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