Annuities have gotten a bad reputation in a lot of investment circles, with most of the criticism centering their rate of return. That misses the way annuities provide you with a guaranteed minimal return on the money invested, allowing you to build a hedge against catastrophic performances from more volatile investment vehicles. As such, they’re an important hedge in your portfolio. If you have limited investment resources and want to guarantee a certain base income during retirement, they can even be your best option, because while their return may not be as great as some products when they perform well, there is a floor to your expectations because many annuities come with a guaranteed minimum interest rate. This is especially true of fixed annuities.
What Makes Fixed Deferred Options Attractive?
Fixed deferred annuities typically offer you a guaranteed income for a specified number of payments that start at a certain age or under certain conditions, such as the death of a spouse. They provide stability and predictability to your financial planning because companies typically guarantee a minimum interest return while working to get a better than minimum performance out of investing your premiums. As a result, annuities often come in above the expected payout, but not always. The actual payment amount is set when the annuity enters the payout phase, and the payments are all roughly equal in size. This lets you plan for very specific income needs, paying a premium designed to ensure your minimum payment during the payment phase reaches or exceeds your goal.
- Take control of your retirement planning
- Take care of dependents
- Hedge other retirement investments
Other Annuity Options
If you are intrigued by fixed annuities but you are looking for other options, check out what you can get from variable annuities, because there are options that fit a variety of investment needs within the realm of annuity investments. If you’re wondering what will work for you, it’s time to research what annuities will do for your existing investment portfolio.