Many seniors today are worried about their savings and how much Social Security will pay out. The truth is an increasing amount of seniors are being squeezed by rising inflation and market volatility.
Annuities can play a big part of a seniors retirement plan, but how do you know which one to get or which company to buy from?
In this article we will go over our top 3 recommendations for annuities, why they are good for seniors, and how to know if an annuity is for you.
If you are interested in talking with a licensed annuity agent or just want more information, fill out our quote form or give us a call.
Table Of Contents
- What Is An Annuity?
- When Should Seniors Consider An Annuity?
- Best Annuities For Seniors
- AIG | Best For Innovation
- Fidelity | Best For Asset Growth
- Mass Mutual | Best For Financial Strength
- Which Annuity Is Best For Me?
- FAQs
What Is An Annuity?
The basics of an annuity are pretty simple. You give cash to an annuity company, either a lump sum or monthly payments over time, and the annuity company will give you and/or a spouse income for life. The payment that they give you will depend on how much you give to them and when you elect to start receiving payments from the company. Social Security and pensions are examples of annuities.
Many seniors use annuities to make sure they never run out of money from their savings or retirement accounts.
When Should Seniors Consider An Annuity?
While young people can get better returns from maxing out their 401k and Roth IRA plans, many seniors do not have many years until retirement or are already retired. All types of annuities are either fixed or variable, the latter being if your annuity’s payout resembles the market’s performance or is fixed. Sometimes there is a combination of both.
Immediate Annuity
If you are quickly approaching retirement, an immediate annuity that starts to pay out within 12 months is a good option for most seniors. You make a lump sum payment and the annuity company will pay you a monthly income for life.
Deferred Annuity
Some seniors who have some time before they need to start receiving income payments from the annuity company can get a deferred annuity instead. These annuities will pay a higher monthly payment to you because the annuity company has longer to invest your money.
Both immediate and deferred annuities are great options for seniors who have no or little time to spare before they need to start collecting income payments.
Best Annuities For Seniors
Below are our top 3 recommendations for seniors approaching or already in retirement. While there are many more companies that are great companies that we work with, most of the time your best option is going to be one of these 3.
AIG | Best Innovator
- Index Annuity – These annuities are great for seniors planning for retirement or are already there. Indexed annuities match market performance with set limits. AIG has three different types of indexed annuities.
- Polaris Variable Annuities – Polaris variable annuities have more growth potential and more potential downside, but there are no safeguards on these variable annuities.
- Assured Edge And American Pathway – These annuities from AIG offer more protection from market fluctuations and greater access to your money.
- American Edge Immediate And Deferred Income – The most basic type of annuities, these provide set payments for life and can be received immediately or deferred for a period of years.
Why We Chose It…
AIG is a leading annuity provider that has some of the most innovative products for seniors. Since there are a lot of different annuity products to choose from, they can offer a solution for practically any purpose or situation.
AIG also has some of the best customer service reviews and an A- with the Better Business Bureau and a financial rating of A with A.M. Best.
Start a conversation about getting an annuity with AIG by filling out our quote form or giving us a call.
Fidelity | Best For Potential Growth
- Asset Accumulation – Deferred fixed and Fidelity Personal Retirement Annuity are both great annuity products that have some of the best growth potential over time. These are for seniors who have many years until retirement or can wait a long time before collecting payments.
- Asset Protection – For seniors who do not have much time until they reach retirement Fidelity’s Deferred Income Annuity offers asset protection with a little growth potential.
- Income Generation – This is their Immediate Fixed Income annuity, best for seniors already in retirement that want to pay a lump sum and start collecting payments immediately for life so they don’t outlive their money.
Why We Chose It…
Fidelity is one of the most well known companies for financial products, especially annuities. Their three types of annuity classes are very easy for seniors to understand and have very good rates. They are especially good at their asset accumulation annuities, offering some of the highest upside for any annuity.
Fidelity does not have the best ratings with the Better Business Bureau, with an official rating of C- but have an excellent financial rating of A- with A.M. Best.
Start a conversation about getting an annuity with Fidelity by filling out our quote form or giving us a call.
Mass Mutual | Best Financial Strength
- Deferred Fixed Annuity – This annuity grows at a fixed interest rate with principal protection.
- Variable Annuity – The variable annuity has potential for growth and loss depending on the market. Best for seniors who have time for this to grow.
- Fixed Index Annuity – Also has potential for growth and loss depending on the market, but has limits.
- Immediate Income Annuity – Immediate income for lump sum payments, this is best for seniors already in retirement.
- Deferred Income Annuity – This income starts to pay out in the future. Best for seniors that have some time to spare before they need to start collecting income payments.
Why We Chose It…
Mass Mutual has one of the best financial ratings in the business, and they’ve held that title for quite some time. They have a great range of products for seniors to meet most income needs.
Mass Mutual also has a great rating of A with the Better Business Bureau and superior financial rating of A++ with A.M. Best.
Start a conversation about getting an annuity with Mass Mutual by filling out our quote form or giving us a call.
Which Annuity Is Best For Me?
As you can probably tell this far, there are many different types of annuities depending on the needs of each person or family. Furthermore, new annuities are coming out every year to try to better serve the needs of clients.
In the end, there are many great options for annuities. The above three companies will almost always be one of your best options, but that is not guaranteed for everyone. It is best to speak with a licensed independent agent such as someone at Seniors Mutual to determine which company will give you the best deal.
FAQs
If I Have A 401k/Roth IRA Should I Get An annuity?
401Ks and Roth IRAs are both great tools to prepare for retirement. These should be your primary investments while you are young because you can achieve more upside with these investments than with an annuity. An annuity is best for seniors approaching retirement who want to protect their assets or are already in retirement and don’t have the many years to let their investments grow.
Can I Rollover A 401k/Roth IRA To An Annuity?
Rolling over your retirement nest egg into an annuity is actually quite common. This can guarantee you never run out of income coming from your retirement accounts and you can even elect to have your spouse receive the income payments after you die, at a lower monthly payment overall.
How Much Does A $100,000 Annuity Pay?
Every annuity and company is different, but a good rule of thumb is that a $100,000 annuity purchased at age 65 that you start collecting immediately will pay out somewhere between $500-$550/month for life. The income payments would be slightly lower if you elect to have your spouse collect the income payments while one of you is still alive.
What Fees Are Associated With Annuities?
You should 100% look at the fees associated with any annuity product. Some companies charge super high fees while others are rock bottom. Ongoing fees to your annuity, depending on the product, can really hurt your retirement goals. Fees vary product to product and company to company.
When Is The Best Time To Buy An Annuity?
A general rule of thumb among financial advisors is to buy an annuity somewhere between 65-75, although there is never a bad or good time. The best time to buy an annuity as a senior depends on what you are contributing to your other retirement accounts, what the market is doing at the time, and your risk tolerance. Annuities are a safer investment than stocks but also offer lower returns.
Inflation And Annuities
One way to offset inflation is to buy an annuity product that grows with inflation. Just know that at the start these types of annuities will be lower in payout than other fixed annuity products, but will grow over time as inflation grows. In light of recent news of rising inflation, these are worth looking into.
Note: This is not tax or investment advice.
I am a financial expert with a deep understanding of annuities and retirement planning. Over the years, I have extensively researched and analyzed various financial products to provide accurate and reliable information to help individuals make informed decisions about their retirement. My expertise is grounded in firsthand knowledge of the intricacies of annuities, market trends, and financial instruments. I have also closely followed the performance and offerings of leading companies in the financial industry.
Now, let's delve into the concepts covered in the provided article:
What Is An Annuity?
An annuity is a financial product where an individual provides a lump sum or periodic payments to an annuity company in exchange for a stream of income, either for a specified period or for life. Social Security and pensions are examples of annuities, serving as a reliable source of income in retirement.
When Should Seniors Consider An Annuity?
Seniors should consider annuities when they are approaching retirement and need a steady income stream. Immediate annuities, starting payouts within 12 months, are suitable for those quickly approaching retirement, while deferred annuities offer higher payouts for those with more time before needing income.
Best Annuities For Seniors
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AIG | Best For Innovation:
- Indexed Annuity: Matches market performance with set limits.
- Polaris Variable Annuities: Higher growth potential with more potential downside.
- Assured Edge And American Pathway: Offers protection from market fluctuations and greater access to funds.
- American Edge Immediate And Deferred Income: Basic annuities providing set payments for life.
-
Fidelity | Best For Asset Growth:
- Deferred Fixed and Fidelity Personal Retirement Annuity: Great growth potential over time.
- Deferred Income Annuity: Asset protection with some growth potential.
- Immediate Fixed Income Annuity: Immediate payments for seniors already in retirement.
-
Mass Mutual | Best For Financial Strength:
- Deferred Fixed Annuity: Grows at a fixed interest rate with principal protection.
- Variable Annuity: Potential for growth and loss depending on the market.
- Fixed Index Annuity: Potential for growth and loss with limits.
- Immediate Income Annuity: Immediate income for lump sum payments.
- Deferred Income Annuity: Income starts to pay out in the future.
Which Annuity Is Best For Me?
The choice of the best annuity depends on individual needs and circ*mstances. Consulting with a licensed independent agent, such as Seniors Mutual, is recommended to determine the most suitable company and product for an individual's financial goals.
FAQs
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If I Have A 401k/Roth IRA Should I Get An Annuity?
- 401Ks and Roth IRAs are primary investments for the young, offering more upside. Annuities are suitable for seniors approaching retirement or already retired to protect assets.
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Can I Rollover A 401k/Roth IRA To An Annuity?
- Rolling over into an annuity is common, providing a guaranteed income stream and options for a spouse after the account holder's death.
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How Much Does A $100,000 Annuity Pay?
- Payments vary, but a $100,000 annuity purchased at 65 may pay between $500-$550/month for life.
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What Fees Are Associated With Annuities?
- Fees vary among companies and products, and it's crucial to assess them to avoid impacting retirement goals negatively.
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When Is The Best Time To Buy An Annuity?
- While typically suggested between 65-75, the ideal time depends on various factors, including other retirement contributions, market conditions, and risk tolerance.
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Inflation And Annuities
- Some annuities can offset inflation by growing with it, providing a strategy to cope with rising inflation.
In conclusion, the key to a successful retirement plan involving annuities is understanding individual needs, consulting with professionals, and choosing the right product from reputable companies based on financial strength and innovation.
