Annuity Strategies

In a 2017 Nationwide Retirement Institute survey, financial advisors revealed some of the primary concerns of today’s pre-retirees, including maintaining their current lifestyle during retirement. These people also are less concerned with growing their assets; instead, they are focusing on drawing them down in a disciplined strategy without taking out too much too early — and potentially running out of money. This often means transferring assets out of high-risk investments and putting them into more income-oriented vehicles.1

With this in mind, annuities have become a popular go-to strategy for a portion of a retiree’s nest egg. With an annuity, you can determine how much money to use to purchase an annuity contract based on how much income you’ll want to receive from that source during retirement. Annuities can also provide a steady and reliable income stream, which is very helpful in retirement planning.It’s important to remember that annuities are designed for long-term needs and that they may be subject to fees, surrender charges and holding periods, which vary by company.

Because annuities are insurance products that require understanding, it’s a good idea to work with an experienced financial advisor to determine which type of contract best suits your particular needs. It can become your personal income stream, wherein you decide how much money to commit now for a guaranteed income in the future. Also, be aware that an annuity income stream is guaranteed by the financial strength of the issuing insurer, not the government. As always, we’re here to help you evaluate whether an annuity is appropriate for your situation.

The good news is that today’s annuities offer a wide spectrum of features and benefits to help customize your income stream. For example, some offer riders that provide payout options for a terminal illness, chronic care, disability and even unexpected unemployment. Some annuities guarantee a return of your premium. These riders are generally optional and may require an additional fee, and they may not be available on all products.

Another way to benefit from an annuity is to use it as a wealth-transfer vehicle. For example, fixed annuity income isn’t taxed until it is distributed. If you preselect a payment stream for a loved one, he or she can receive the income throughout a period of time to avoid a large tax liability as the result of a one-time, lump-sum death benefit.3

Because they offer options for reliable lifetime income, annuities remain a popular option when creating an income plan for retirement assets. The following are some recent insights discovered by LIMRA Secure Retirement Institute’s 2017 Annuity Buyers Metrics study:4

  • Annuities appeal to pre-retirees and retirees by addressing three major retirement income goals: asset accumulation, preservation of principal and predictable retirement income.
  • Individuals typically buy a guaranteed income annuity at or in retirement when they are at the peak of their income years or accumulated assets.
  • 80 percent of retiree households (with an annual income of at least $35,000) that own an annuity have more than $100,000 in investable assets.

Content prepared by Kara Stefan Communications.

Eric Henderson. June 26, 2018. “Using Annuities To Prep Clients For The Next Recession.” Accessed Aug. 22, 2018.


3 Rich Lane. Insurance News Net. June 2018. “Annuities Can Help Boomers Consider Wealth Transfer Plans.” Accessed Aug. 22, 2018.

Jafor Iqbal, Todd Giesing. Insurance News Net. May 2018. “Buyers Look Past Marketing and Buy the Annuity’s Purpose.” Accessed Aug. 22, 2018.

Neither our firm nor its agents or representatives may give tax advice. Individuals should consult with a qualified professional for guidance before making any purchasing decisions. 

We are an independent firm helping individuals create retirement strategies using a variety of insurance and investment products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic financial planning strategies and should not be construed as financial advice. All investments are subject to risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.

The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions. If you are unable to access any of the news articles and sources through the links provided in this text, please contact us to request a copy of the desired reference.


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