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CALL US: (888) 440-2468

have an annuity question?
have an annuity question?

Possible solutions for filling in a retirement income shortfall

In the past, many retirees could count on a stable income from a variety of different sources, such as Social Security, an employer-sponsored defined benefit pension plan, and income/dividends from personal savings and investments. But today, things are different. With most companies doing away with the traditional pension, and Social Security only replacing, on average, about 40% of pre-retirement earnings, it is up to many retirees to make up the difference between how much cash flow they will have coming in and how much they need. So, if you don’t have any strategies in place yet, it is important that you come up with some possible solutions for filling in a retirement income shortfall. One strategy could involve using an annuity. Annuities are designed for paying out income on a regular basis, either for a pre-set time period – such as 10 or 20 years – or for the remainder of your lifetime, regardless of how long that may be. This, in turn, can help to alleviate the concern that many retirees have about depleting assets and income while it is still needed.

Added Annuity Features that Make These Financial Vehicles Even More Enticing

In addition to generating an ongoing income stream, depending on the type of annuity you own, there are other features that can make these financial vehicles even more attractive for investors and retirees. For instance, deferred annuities allow the funds in the account to grow on a tax-deferred basis. This means that there is no tax due on the gain unless or until it is withdrawn. Tax-deferred growth can allow funds to compound exponentially, as growth is achieved on the principal, on the previous gains, and on the funds that would otherwise have been taken out in taxes. Other nice features that may be included in an annuity include:
  • Death benefit
  • Penalty-free waiver of funds for a terminal and/or critical illness diagnosis
  • Penalty-free waiver of funds for qualifying long-term care needs and services
  • Some liquidity (many annuities allow up to 10% of the contract value to be withdrawn each year without incurring a penalty)
Fixed and fixed indexed annuities will also keep your principal – as well as your previous gains – protected in any type of market or economic environment. This can be a plus for those who are risk adverse.

Do You Have an Unfilled Retirement Income Shortfall?

If you don’t have an estimate of your retirement income and expenses, you need to do so in order to determine whether or not you will have an income “gap” – and if so, it is critical that you put a strategy in place to fill it. Annuities can provide you with an ideal solution. But these financial vehicles are not right for everyone. So, it is recommended that you talk with a retirement income specialist before you make a commitment to any type of annuity. At Annuity Gator, we focus on educating consumers (and financial professionals) on how annuities work, and where they may – or may not – fit in with certain portfolios. So, if you would like to schedule a time to talk to an Annuity Gator expert, please feel free to contact us toll-free by calling (888) 440-2468 or you can email us with any questions that you have by going to our secure contact form. We look forward to assisting you.
Possible solutions for filling in a retirement income shortfall

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