Who Are Annuities Right For?

  1. 12689 POINTS
    Ted Ratliff
    Owner, SFS Associates,
    There is no one correct answer to this question.  It depends on the reason for the annuity since annuities can be a tool for a number of situations.  The most common is use as a retirement funding tool.  Annuities are a safe way to accumulate money fore retirement and provide a guaranteed life income.  They can be used by those who do not have the resources to risk the market losses from stocks and other investments.  They can also be used as a cushion or safety net for other investments by those who have resources to invest but do not want to risk losing their entire portfolio.  Never use any long term investment as your sole savings vehicle.   Make sure you have the priorities first.  These are liquid savings of at least three to six months and a solid life insurance portfolio in case you do not live long enough to meet your retirement goal.  Then, based on your situation you can diversify into a combination of safe and risky investments.
    Answered on June 30, 2013
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    David RacichPRO
    Fountain Hills, Arizona
    Every product purchase has a value proposition to assess. All savings and investment products should have a determination process to qualify as suitable for purchase by the saver or investor. Non-qualified annuities, whether fixed, indexed or variable, are no exception. A personal financial profile that includes a risk tolerance test, financial goals, effective tax bracket and a life expectancy report is necessary to establish the type of annuity that should be purchased.
     
    Answered on June 30, 2013
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  3. 37376 POINTS
    David G. Pipes, CLU®, RICP®
    Business Development Officer, T.D. McNeil Insurance Services, Fresno, California
    An annuity is designed for a person who needs to have a guaranteed life time income.  An immediate annuity solves this problem quickly and efficiently.  Because the gain inside an annuity is not taxable prior to distribution, it can also be used to accumulate money on a tax deferred basis.  There is a wide selection of IRAs that vary in safety and yield.  These can be used in IRAs, Roth-IRAs, and many other tax qualified plans.  Annuities can also be part of savings plans outside tax qualified plans.  The key to an annuity in the accumulation phase is that it is a long term investment.  It is not designed for short term objectives.
    Answered on April 30, 2014
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