• Question
  • would like to invest in annuity or similar retirement dsocument by removing the uncertainty of the

    Asked by a 76 year old man from Elk Mound, WI on 3/11/2013

    would like to invest in annuity or similar retirement dsocument by removing the uncertainty of the stock market and living off the interest of my money.

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  • Categories: How to Choose, Annuities

Answers

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  • When you are thinking about your investment portfolio, you should consider your income needs, inflation, and liquidity. Generally speaking, the less your investment is at risk, the less return you should expect. Knowing what you need your portfolio to provide, gives you a better idea of how much risk you would need to consider taking or if it’s better to adjust your goals.

    Annuities are financial products sold by insurance companies, which can be an effective investment vehicle for people who are concerned about outliving their assets, and generally provide a higher yield compared to CDs. Fixed annuities do not have the uncertainty of the stock market, because they guarantee your principal while providing limited growth opportunities along with guaranteed income. However, you might lose purchasing power in the future because of inflation. Annuities can reduce liquidity, meaning that you may have limits on how much you can withdraw without penalties

    Variable annuities do not guarantee your principal, but can guarantee a minimum lifetime income and remaining income payments may vary depending on the performance of the portfolio. The greater risk to principal with a variable annuity should provide opportunities for greater growth. However, there is no guarantee that the income from a variable annuity is always higher than the income from a fixed annuity.

    To determine if you should invest in an annuity or similar retirement products, you should review your specific income, liquidity needs, growth goals and risk tolerance with a qualified advisor. Sometimes diversification can mean diversifying among types of investment products, not just among stocks, bonds and cash.

    This article may help you learn more about annuities, http://www.newretirement.com/Services/Annuities_Pros_And_Cons.aspx

    NewRetirement.com also has a calculator for certain types of annuities you can use at https://www.newretirement.com/Services/Annuity_Calculator.aspx.

    This answer is provided as general information only and provided by Master’s students pursuing a degree in Personal Financial Planning at Texas Tech University. No warranty is made regarding the fitness or accuracy of the information provided in this answer. You should seek advice from a licensed CPA, attorney or Certified Financial PlannerTM as to your unique financial situation.

  • Login to rate this answer:   Answered on 3/28/2013
**All above answers are provided as general information only. No warranty is made regarding the fitness or accuracy of the information provided in this answer. You should seek advice from a licensed CPA, attorney or CERTIFIED FINANCIAL PLANNER™ as to your unique financial situation.