• Upstate Wealth Management

3 Surprising Challenges That Can Be Solved by an Annuity

Risk management is the foundation of any solid retirement strategy. You’ll likely face a wide range of financial threats in retirement, from health care costs to taxes to market risk and much more. You can minimize these risks and their impact on your retirement by implementing a well-developed strategy.

Part of planning for retirement is identifying the tools that can best help you reach your goals and minimize risk. For example, you may adjust your asset allocation to reduce your risk exposure. You might purchase long-term care insurance or a supplemental Medicare policy to reduce your health care costs.

You also may want to consider an annuity as part of your retirement strategy. Annuities can be effective tools for addressing a variety of risks. Below are three common planning risks that can be addressed with an annuity. A financial professional can help you analyze your needs and determine whether an annuity is right for you.

Guaranteed* Lifetime Income

Past generations of retirees could count on pensions and Social Security to fund their retirement. Unfortunately, today’s retirees don’t have that luxury. Social Security is a valuable resource, but it’s unlikely to fund a full retirement for most people. Employer pensions have become a rare benefit.

If you’re like most retirees, you’ll need to count on withdrawals from your investments and savings to fund a large portion of your expenses. Those withdrawals may not be guaranteed*, and they could be affected by market risk. If your investments decline in value, there’s a risk that you could outlive your assets.

You can address that risk with an annuity. For example, you can use a single premium immediate annuity (SPIA) to convert a portion of your assets into an income stream that’s guaranteed* for life. You could also use a variable or fixed indexed annuity with a guaranteed* income benefit to potentially increase your assets and generate predictable income that lasts for life, no matter how your investments perform.

Downside Risk

Many people become more conservative as they approach and enter retirement. That’s natural. After all, you’ve worked hard to earn your retirement assets. The last thing you want is to see them decline in value because of a market downturn.

There are a number of steps you can take to minimize your risk exposure. One is to adjust your allocation in a way that more accurately reflects your risk tolerance. However, you also may want to consider an annuity as part of your strategy.

Fixed deferred annuities allow you to earn a predictable, defined interest rate over a set period of time. Your premiums are guaranteed* against loss. You could also use a fixed indexed annuity, in which your interest can fluctuate depending on market performance. However, your annuity never declines in value. Both types of annuities offer tax-deferred growth.


Do you want to leave a legacy for your children, grandchildren and other loved ones? A will is a good first step to guide the distribution of your assets. Even if you have a will, however, your estate will go through a process called probate.

Probate is the legal settlement of an estate. It involves a number of tasks, including the payment of debts, filing of taxes, sale of assets, notification of potential heirs and more. As you might expect, the process can be lengthy and time-consuming. Costs are often paid out of estate assets, reducing the amount that’s passed to your heirs.

Annuities have beneficiary designations. You state your beneficiaries on the annuity policy, and then the insurer pays the death benefit to those individuals upon your death. Since the assets are distributed via a beneficiary designation, they avoid probate. Your annuity assets aren’t subject to probate delays or costs, so you can maximize your legacy to your loved ones.

Ready to see if an annuity fits into your retirement strategy? Let’s talk about it. Contact us at Upstate Wealth Management. We can help you analyze your needs and implement a plan. Let’s connect soon and start the conversation.

*Guarantees, including optional benefits, are backed by the claims-paying ability of the issuer, and may contain limitations, including surrender charges, which may affect policy values.

Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.

18210 - 2018/10/31

25 views0 comments