IRAs and 401Ks may be the best ways to plan for retirement, but they have their limits, mainly in how much you can contribute to them. If you’ve grown accustomed to a certain standard of living, the last thing you want to worry about in retirement years is your budget.
However, if you buy an annuity, retirement income doesn’t have to have a cap. Long after you’ve maxed out your investments to employer sponsored plans and IRAs, you can continue to buy annuities, guaranteeing a steady flow of cash throughout your life.
For good reason, one of the greatest fears many face in retirement is outliving their savings. Living too long shouldn’t have to be something you have to worry about, but if your savings run out, if your 401K or IRA gets depleted, where will you turn? With annuity, retirement payments never run out, so you will have a continual inflow of cash, no matter how long you live.
That’s probably why nearly 10 million people facing retirement today are purchasing annuities. It’s a reliable flow of income that you can depend on or just save as a nice safety cushion of savings for unexpected expenses you might face in your retirement.
Of course, you could plan better than you think and end up so well off financially that you don’t need the annuity. You may want the money in a lump sum in order to buy a vacation home, or you may need it for a financial emergency. Traditionally, you’d have been stuck with that annuity. Sell that annuity, and you would have faced serious taxes or fees that is just wasn’t worth it.
Fortunately, that’s no longer a problem. The rules and markets for annuities have changed. A secondary market now exists. If you no longer need the annuity, sell it. More and more people are doing it, with new annuity sales now topping $200 billion a year. Annuities are now sold as asset backed securities to big institutional investors.
It’s possible you’ll prefer the cash in a lump sum for other investments or if you face a financial emergency. These days, you’re never stuck an annuity, as the market continues to have considerable demand that makes an annuity as good as cash.
An annuity is a solid nest egg to depend on. It provides a lasting financial security, as well as a guarantee you won’t outlive your savings. Plus, it’s a valuable commodity, easily traded in for cash if you need it. Annuities are safe ways to hedge your best against the financial pitfalls of retirement, guaranteeing you can continue to enjoy your life with the income you’ve become accustomed to.
Tags: Finance