We work with a lot of annuities here at Annuity Genius, from variable and fixed annuities to the less understood immediate annuities, we’ve done all of our homework for you so that you don’t have to. We speak to a lot of people who have many misconceptions about immediate annuities work. Today, we’re going to dispel some of those myths so that you can get a better understanding of immediate annuities.

  1. If I die, the insurance company keeps all the money. The only time this is true is with “life only” benefit. This payout ends upon death. It has the highest payout factors and can be a planning tool when the payout is used to fund life insurance. Upon death the annuity ends, but the life insurance pays up.
  2. Future guaranteed annuity payments will be decimated by inflation. Immediate Annuities can be purchased with an annual COLA. Payments can be increased by 3-7% or more annually compounded.
  3. A mutual fund will outperform an Immediate Annuity as a source of retirement income. A mutual fund might outperform the Immediate Annuity. We have no bias against mutual funds. We do, however, feel that clients looking for retirement income should recognize and evaluate the risk/reward trade off. If a mutual fund is used to provide income certain risks must be identified and we can discuss this with you.

With the baby boomers starting to reach retirement age, a fresh look at the immediate annuities option is timely. Call us today to get started and let us help you make sure you’re financially secure for the rest of your life.