Do you want to have more fun in retirement? If so, some financial experts say that you should buy an annuity. In fact, a recent report stated that “retirees who convert their savings into guaranteed lifetime annuities effectively double the amount they are willing to spend each year, on themselves and their families.”
Further, those who hold more of their wealth in guaranteed income will tend to spend more than retirees who have a larger share of their wealth in investments. One key reason for this is because it is typically necessary to work out the return you are going to earn on your investments, along with how volatile they will be, how long you will live, and how much you can actually spend… which can end up increasing as healthcare and long-term care expenses tend to rise as people get older.
Do Retirees with Annuities Really Have More Fun?
Even if you have a significant net worth built up, it doesn’t necessarily mean that you will have a comfortable retirement. For instance, if you use a portfolio draw-down strategy for income, you could end up “playing defense” in order to keep your money safe so that you don’t run out.
Using an annuity and having the reassurance that they won’t outlive their savings and income, though, can allow retirees to spend more freely and to have fun while they can – and with a fixed or fixed annuity, your principal – and your previous gains – can be locked in.
Annuities can also be purchased with annual cost of living adjustments (similar to with Social Security) so that the income will increase over time, essentially helping to alleviate the impact of future inflation.
In addition to providing you with tax-advantaged growth and ongoing income, an annuity could also provide you with some other nice benefits, too. For example, having a good, solid income stream in place could allow you to retire before you had initially intended to.
For instance, if an annuity generates enough income to cover your living expenses, it may be possible to tell your employer good-bye and essentially “replace” your paycheck with income from the annuity.
Some annuities even offer a joint life income option. In this case, income will payout from the annuity until the death of the second recipient. This can provide you with security, knowing that income will not run out, regardless of how long it is needed.
All annuities are not exactly the same, though. So, it is essential that you have a good understanding of how different annuities work, and how they may – or may not – be right for your short- or long-term needs.
Are You Ready to Create a Fun and Secure Retirement?
If you’re ready to create a fun and secure retirement using income from an annuity, we should talk. At Annuity Gator, our mission is to educate consumers and financial advisors alike about how these financial vehicles work, and how they may be able to help your retirement be a fun time in your life.
Our retirement income experts can help you to narrow down the annuity (or annuities) that could work for your particular retirement and other financial objectives. If you would like to learn more about annuities and how they may benefit you, feel free to reach out to us directly at (888) 440-2468, or you can send us an email with any questions that you have by going to our secure online contact form. We look forward to meeting you.