Fixed annuities can offer an income stream guaranteed never to end or decrease for a customer’s life. Client’s can receive a predetermined income for the rest of their life or a selected time period with tax-deferred compounding. Fixed annuity holders generally do not have much to be concerned over, as there are no portfolios to manage, statements to file, rollovers or maturity dates to remember and medical complications. In addition to helping offset investment risk, they can provide asset transfer to a beneficiary, potentially eliminating the inconvenience and cost of probate. Fees are minimal. Taking them a step further, the relatively recent equity-indexed varieties offer the potential safety of a fixed annuity with possible increased earnings based on the performance of an underlying index.
“Clients like to be able to focus on what their rate of return will be,” says Russ Story, certified senior advisor at Story Wealth Management Group in Douglas, Ga. “They generally focus on this more than fees. The idea of a minimum interest rate is a comfort in the face of fluctuating values.”
The idea of never running out of income has also remained a key fixed annuity quality. “Many Americans are seeking help in moving from the accumulation phase to the income phase of retirement,” says Michael Gallo, senior vice president of New York Life Insurance Company. “People are living longer and seeking guaranteed lifetime income sources. They need to take more responsibility for their retirement.”
This is the second article from Joseph Finora in our series on fixed annuities. Stay tuned to www.SeniorMarketAdvisor.com for more in the series.