Annuities in Retirement

Annuities in Your Retirement Plan?

Making an Investment Plan

With high fees, complex guarantees, and questionable returns, annuities might imply certainty, but in reality, they may not be the best fit for many retirees.

Consider those warranties you’re offered on all sorts of products. How often have you paid for one and later regretted it or, even worse, found that the warranty itself outlasted the item it was meant to protect? Annuities can work in a similar way: you pay upfront for that promise of protection or guarantees, but the cost of that "insurance" can outweigh the actual benefit, especially if your situation or goals change over time.

The Power of Fear

The sale of an annuity is compelling. In a contract between you and an insurance company, you are promised a lifetime stream of monthly income, which sounds great - especially if you have anxiety about the future (and who doesn’t?). But there is more than meets the eye, and we encourage you to do your homework. Annuities can be confusing and are commonly misunderstood. Annuities may be marketed as investments, but annuities are not the same as investments in index funds or ETFs. They are contracts – contracts that lock you into an agreement. While annuities vary, all of them have commissions.

Alternatives to Annuities

At One Day In July, your financial advisor can offer you some other options as you plan for retirement, including a monthly income stream that does not come attached to high fees and confusing language. We do not take commissions, and we are transparent in all that we do.