[vc_row][vc_column width=”2/3″ el_class=”section section1″][vc_column_text] Widely considered a smart option for sustaining income during retirement, annuities come in many forms, add-ons, and varieties.
Leader of Nationwide Advisory Solutions based Louisville, Kentucky, Craig Hawley says that despite both the challenges and changing landscape of retirement income, annuities are one of the only guaranteed sources of income that clients aren’t able to outlive.
Essentially, annuities are a contract between insurance carriers and clients. There is variance in the way funds are invested and disbursed, but what is constant is the promise of a payout. The only question on clients’ minds then is when, and what are the consequences of receiving a payout at one point in retirement versus another?
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One Size Does Not Fit All
Hawley says the answer lies in the development of a strategic plan. What’s best for one client depends on many variables and may not always be the smartest move for someone else. Clients have to consider their own income needs, alternative sources of income, their health, and life expectancy.
Every annuity is just as complex and unique as each client. David Lau is the CEO and founder of DPL Financial Partners, based in Louisville, KY, and works primarily with registered investment advisors to offer a range of annuity and insurance consulting services. Lau notes that the features of an annuity’s income are set up to be employed at the age of 65.
Why Wait?
With that in mind, it may actually still be smarter for clients to wait until age 65 and beyond to reap the income benefits of the annuity, says Lau. In general, it’s not of benefit for the client to wait unless the product has deferral credits. With the ability to increase the payout amount for particular annuities, deferral credits make the income payouts worth the wait.
Some annuities are set up, so the amount of the payout goes up when the client ages out of one band and into a new one. This was noted by Bryan Pinsky, senior vice president of product development and individual retirement pricing at annuity provider AIG. Pinsky explains that either by an index or market-based performance or guaranteed rate, payments for other annuities are likely to increase over time, and then hold the potential to get locked in after a set period of time.[/vc_column_text][/vc_column][vc_column width=”1/3″][vc_single_image image=”25543″ img_size=”292×285″ style=”vc_box_shadow”][/vc_column][/vc_row]
