There are many different types of annuities, but there are only 2 primary reasons why annuities can work for most seniors and baby boomers. Those two solutions are income and principal protection.
The #1 reason that most seniors buy annuities is for lifetime income guarantees. Annuities are the only product that contractually solves for longevity risk, or outliving your money.
Single Premium Immediate Annuities (SPIAs) provide the highest contractual guaranteed payouts, have no annual fees, and can be structured so that the annuity company never keeps a penny.
In addition, SPIAs can be set up to pay for a specific period of time as well as for life. You can also combine a life and what the annuities industry calls “period certain guarantee” to fit your specific situation. A period certain guarantee is an annuitization-method option that allows consumers to select a specific time period for which the annuity income payments will last.
The other need that annuities can fill is protecting your money from loss. Principal protection is important to most seniors, and Fixed Rate Annuities (also called Multi Year Guarantee Annuities) are a safe way to make sure you receive a contractual yield just like a CD.
Fixed Rate Annuities (MYGAs) have no annual fees, and provide an annual percentage yield for a specific period of time. Currently, the shortest term Fixed Rate Annuity is 3 years in duration and rates can be locked in for as long as 10 years.
Annuities are commodity products, so whether you need income or principal protection, you should shop all carriers for the best contractual guarantees available to solve for your specific situation.
Stan has written a series of product manuals that explain annuities in easy-to-understand language and gives consumers the tools they need to ask questions and buy only what they need: http://www.stantheannuityman.com/amazon
Stan The Annuity Man is one of the country’s leading Independent Annuity Agents. He is nationally recognized as an annuity critic and expert, and has been called one of the most outspoken consumer advocates for annuities. Stan is the most read and most controversial annuity commentator in the country, and his book The Annuity Stanifesto has quickly become the go-to-resource for all things annuity. For more information go to:www.stantheannuityman.com