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  • Writer's pictureJamie Smith

Are Annuities Right for Your Retirement Plan?

Updated: Nov 30, 2023


Bedrock Financial Group retirement planning
Bedrock Financial Group allows you to plan for the retirement you deserve.

All About Annuities


Annuities fill the retirement income gap by allowing you to convert savings into a stream of income guaranteed to last for the remainder of your lifetime. More than that, some annuities offer a safe place for your money to grow. This allows you to avoid the downturns that come with stock market investments. Suppose you are worried about making your savings last for the entirety of your retirement, in addition to what Social Security provides. In that case, an annuity may be right for you as a part of your retirement plan.


An annuity is an insurance-based retirement plan that creates a stream of income throughout retirement, somewhat like a pension. With an annuity, you have a contract with an insurance company, to which you pay a premium - much like life and health premiums - and, in return, receive regular payments over an agreed-upon timeframe.


The main reason to have an annuity is to protect you from the most significant risk to your retirement - outliving your savings.


Why Would I Buy an Annuity?


First, it is a good idea to find a trusted professional. It is essential to trust the individual or team to manage your money. After all, you worked hard for your retirement savings. Now, the annuity market has extensive offerings and products to find the right solutions to fit your needs. Your decision to buy an annuity will depend greatly on your needs.


The main reason to have an annuity is to protect you from the most significant risk to your retirement - outliving your savings.


Guaranteed Income Stream for Life

With a life annuity, you can never outlive your savings. No matter how long you live or whether you collect your original investment plus earnings, you can receive income payments.


Tax Advantages

Annuity growth is tax-deferred. This means any earnings or interest may accumulate tax-free until the money is withdrawn.


Limitless Contributions

There is no limit to how much you can contribute to your annuities, unlike other tax-preferred retirement accounts like a 401K or IRA.


Probate-free

Any annuity that is inherited does not have to go through probate.


Contract Provisions

Riders are available should you require other services or want to designate a beneficiary to guarantee a specific payout amount, even if you die early.


When Should I Buy an Annuity?

One thing to know upfront is that you cannot take payments from an annuity without a penalty until you reach the age of 59 1/2. An annuity should be treated the same as any other retirement option. However, unlike other retirement plan options like a 401k or an IRA, there are no limits on how many deposits you make into an annuity each year.


A helpful principle in investing is the 'time horizon'; the idea is that the sooner you buy an annuity, the more time your money will have to grow. However, remember the money you use to purchase an annuity is unavailable until you receive an income stream and without penalty until the age of 59 1/2.


Evaluating your finances, goals, and comfort with various risk levels is essential when determining if an annuity is right for you. Here are some helpful questions to help you make that determination.


  1. At what age are you planning to retire?

  2. What are your monthly expenses? Include housing, insurance, utilities, gas, food, etc.

  3. How much do you have or plan to have in your retirement savings?

  4. How is your health?

  5. What is your comfort risk level when investing?

  6. How. much are you, or do you expect to receive each month from Social Security?

  7. Do you have any pensions or other sources of income during your retirement?

  8. Do you want to leave a financial legacy?

  9. Do you foresee the need for long-term care for yourself or your spouse?

  10. What expenses do you have now that you won't have in retirement?

There are various types of annuity options, riders, and clauses, and although they may seem intimidating, having the right team can help you understand the concepts, thus making it easier to find what would work best for you.


Like most things, annuities have evolved, but for the better, and have become an essential tool in your retirement toolbox when used appropriately.


Our team at Bedrock Financial Group is here to answer your questions and provide a complimentary consultation to see if an annuity is right for you. If interested, please call Jamie Smith at 833-905-1060 or email jamie@mybedrockfg.com. To find out about all of our services, please read below.

 

Bedrock Financial Group, a Veteran and First-Responder-owned full-service insurance agency
With Bedrock Financial Group there is something for everyone.

Bedrock Financial Group, your full-service insurance agency. With Bedrock, you can get the insurance you deserve.


Want to know more?

At Bedrock Financial Group, we're a Veteran and First-Responder-owned full-service insurance agency. We provide complimentary consultations and no-cost Medicare reviews. Our home office is located in New Albany, IN. We have a Senior Resource Center in Stanford, KY, and a full-service agency in Asheville, NC. We also offer the following services:


  • Life Insurance

  • Annuities

  • Wealth Management

  • Home + Auto

  • Renter's + Condo + Home Insurance

  • Medicare Plans

  • Medicare Advantage Plans

  • Medicare Supplement (Medigap)

  • Hospital Indemnity

  • Final Expense (burial planning)

  • Mortgage Protection

  • Business Insurance

  • Retirement Planning

  • Medicare Enrollment Help

  • + More

We service the following states: Florida, Georgia, Illinois, Indiana, Kentucky, Michigan, Missouri, North Carolina, Ohio, Oklahoma, Pennsylvania, South Carolina, Tennessee, Texas, Virginia, Alabama, Connecticut, and West Virginia.


If you have Medicare questions, you can call our team at 502-200-1516. If you want to schedule an in-person Medicare Benefits Review, please call 833-905-1060. If you would like a comprehensive overall review, call 833-905-1060 or email hello@mybedrockfg.com with your contact information, including your name, city, state, and phone number, and we will connect with you.



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