304- Annuities: A North Star in Uncertain Times
Written by: Cary Carney, Vice President of Sales at Kuvare, Guaranty Income Life Insurance Company, a Kuvare company
Rampant inflation, the possibility of World War III, potential food shortages, interest rate increases, skyrocketing fuel prices as well as stock market volatility and a potential crash. A new concern seems to arise almost daily. Some have materialized; hopefully, many will never come to fruition. Whether they are realities, possibilities or just hype, we need to ensure the safety of our retirement funds so we can utilize these savings in whatever new world awaits in the future.
So, where do we turn? I believe the optimal focus is on SAFETY! During these uncertain times, safety and guarantees are paramount. Does that mean cash out and bury the money in the backyard or under a mattress? Certainly not, even in the most radical circumstances there are financial products, such as annuities, designed to help you navigate current headwinds.
Why are these products so popular? My previous blogs have detailed the benefits of fixed and fixed indexed annuities, and now is an ideal time to revisit those benefits.
As mentioned earlier, annuities offer safety and various types of guarantees.
If you adhere to the product provisions, you are typically guaranteed no less than the premium you put into the product.
Many annuities will also guarantee a minimum additional return on your premium.
Some annuities guarantee that you will be able to capture a portion of a certain market’s increase.
Most will guarantee no loss of premium because of poor market performance.
You may also secure a guaranteed income payment that you cannot outlive.
In today’s environment these benefits alone may shine like the North Star pointing to an opportunity for a portion of your financial portfolio.
When the stock market is extremely volatile with predictions of a potential correction, do you want your funds exposed to potential fluctuations or losses in general? Likewise, do you want to put money in bonds for a safer alternative with the talk of higher interest rates (which works inversely with the bond yields, making this “safer” bond alternative much less attractive)? The answer to both is probably not!
Is there another alternative that can guarantee a paycheck for the rest of your life? The security of a payment to help with living expenses seems important when we don’t know where inflation is headed.
A Taxing Topic
Finally, considering this is tax season, make sure you are taking advantage of all the tax breaks available. One of the primary features of annuities is that they are tax deferred.
For instance, are you paying taxes on interest or income from alternative financial instruments that you do not need or use? If so, why not take advantage of the tax deferral that an annuity can deliver? You never pay taxes on the gains within the annuity until you choose to take the money out and then you are only taxed on the gains taken at that time.
To summarize, why face adversity with your retirement? Consider annuities to help you through this turbulent, uncertain period. Annuities have stood the test of time. They’ve adapted and overcome to offer opportunities to maintain your retirement funds and continue to accumulate additional retirement funds. They can provide a monthly or annual paycheck for the rest of your life, enabling you to maintain your standard of living without worrying about of running out of money.
Looking to learn more about the different types of annuities and get answers to your key questions? The FinancialVerse: Today’s Annuity Products - A Tool to Create Protected Lifetime Income explores the many benefits of annuities and how they can be a valuable addition to your financial plan.