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#002 – How Do Annuities Fit Into A Retirement Plan?

JANUARY 21, 2020

By now, you may already know that we were the very first website to offer extensive and independent reviews about annuities to help people research individual products before they buy them. Our goal when we started was to help people understand annuities and we wanted to give honest guidance so people could make an informed decision of whether or not an annuity was right for them. And if so, which one. So if you’re moving closer to retirement, you may be wondering how annuities fit into a retirement plan. Over the past decade or so, more people are being required to secure their own retirement income as employers are doing away with defined benefit pensions. And the only financial vehicle that allows you to lock in an income stream for life, no matter what is happening in the stock market or with interest rates, is an annuity. But just like most other products and services, all annuities are not exactly the same. So, it is absolutely essential that you know which one – if any – may fit with your short and long-term financial objectives. So, how do annuities fit into a retirement plan? Let us count the ways! In their most basic sense, annuities are designed for providing ongoing income for a pre-selected period of time (such as 10 or 20 years), or even for the remainder of the income recipient’s life. These financial products have actually been in existence for thousands of years, dating back as far as the Roman empire, when annual stipends were paid during the reign of the Greek emperors. Today, many retirees use annuities for filling in an income “gap” that exists between their other income sources and expenses, or even for replacing what an employer-sponsored pension plan would have paid, but didn’t.

Fitting Annuities Into Your Future Income Strategy

Most annuities offer several different income generation options. For instance, the period certain annuity income choice will pay out for a set amount of time. If the income recipient (i.e., the annuitant) passes away before the time period has elapsed, income will continue for the remainder of the time period to a named beneficiary. The lifetime income option, as its name implies, will pay income for the rest of the annuitant’s lifetime – even if he or she lives for 30, 40 or more years. In addition, if the joint-life income option is chosen, income will continue for the remainder of two people’s lives, such as a husband and wife. On top of a guaranteed income stream, annuities can provide other nice benefits, as well. For example, a deferred annuity won’t pay income until a time in the future. During its “accumulation” phase, the growth that takes place in the account is tax-deferred. This means that there are no taxes due on the gains until the time of withdrawal. Other features that may be found on annuities today include penalty-free access to funds if the annuitant is diagnosed with a terminal illness and/or if he or she needs to reside in a nursing home (typically for at least 90 or more days). Even though there is a long list of benefits you can receive from an annuity, these products contain a lot of “moving parts.” So, before making a commitment to purchase one, it is essential that you talk to an annuity specialist who can help you to narrow down which annuity could work best in your retirement plan.

Ready to Learn More About How Annuities Fit Into a Retirement Plan?

If you’re ready to learn more about how annuities work for retirees, and whether or not an annuity will fit into your retirement plan, you won’t want to miss the next Annuity Gator podcast. In this episode, our CEO Terry Heys reveals how annuities fit into a retirement plan and whether or not an annuity may be right for you. Terry will help to explain the key differences between what we call the “distribution phase” versus the “accumulation phase” of retirement planning. You will also discover what should be the primary goal of your savings when you are approaching retirement, as well as when you are currently retired, and why many people are turning to annuities to help them with guaranteed lifetime income. So, be sure to tune in and get your future income plan on track for a healthier, happier, worry-free retirement! Listen to the episode on Apple Podcast, Google Podcast, Spotify, Stitcher, or on your favorite podcast platform.

How Do Annuities Fit Into A Retirement Plan?
  • Richard Bertke
    9:27 AM, 21 January 2020

    How much is needed to start an annuity

  • Annuity Gator
    4:50 PM, 21 January 2020

    Hi Richard– Thank you for your message.
    We would be happy to provide you more details on any annuity you might be interested in. In order to best support you, we would need some additional information from you. Rather than sending the info back and forth via email, it would be best to discuss it by phone. Please feel free to contact us directly, toll-free, at (888) 440-2468 to chat with one of our annuity specialists or visit
    We look forward to hearing from you.
    Annuity Gator

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