At Income For Life LLC, we often hear retirees and near-retirees express their concerns about annuity products. When we dive in a bit deeper, it is typically determined rather quickly that the information they believe to be true is actually false – and they never knew it. Sad, but true.
Here are a few misconceptions about annuity products that can put to rest some of your concerns – and what the facts actually are:
MYTH: Annuities are investments.
Wrong! Fixed annuities are insurance products which have the ability to guarantee an income stream throughout retirement; they are not investments.
MYTH: You can outlive fixed income annuity payments.
Wrong! Fixed annuities are the best way to solve for longevity risk and be guaranteed an income stream for life.
MYTH: Fixed annuities are not a safe asset class.
Wrong! Insurance companies are regulated by state regulations. Insurance companies must have sufficient assets to make good on their guarantees. There is no loss of principal even when markets decline or the economy falters.
MYTH: Fixed annuities cannot provide lasting income to a surviving spouse or other beneficiary.
Wrong! A spouse, survivor, or other named beneficiary can keep receiving a guaranteed income stream as elected.
MYTH: Annuities have no liquidity options.
MYTH: Annuities cannot provide a reasonable rate of return.
Wrong! Due to principal staying intact, interest, and the power of belonging to an insurance pool, there’s a solid rate of return in a fixed annuity.
MYTH: A substantial portion of retirement income should be longevity insured.
Matt Nelson, president and host of Income For Life Radio