You have complex and unique retirement strategy needs, from long-term care options to leaving a legacy. Find out how a variable annuity can help address these needs and complement your existing retirement strategies.
Finding a financial solution to meet your retirement goals can be overwhelming. And you don't want to leave opportunities on the table. If you're looking for an option that provides you with guaranteed income, you may want to consider annuities.
In recent years, market volatility and recession fears led to interest rate hikes. This in turn contributed to higher annuity payouts. That's why a variable annuity may be worth your consideration. It comes with built-in features to help grow and protect your retirement income.
Here are 5 factors to consider when deciding if a variable annuity is right for you.
1. It's designed for lifetime income
When uncertainty looms, adding a variable annuity with a living benefit to your financial strategy has advantages. It can reduce reliance on your portfolio's non-guaranteed investments.
This remains true even if your contract value falls to zero or your portfolio takes a hit after a poor sequence of returns. A living benefit does come with a cost, but the guarantee it offers could be worth the investment — especially with market volatility.
You can add a living benefit rider to a variable annuity. This gives you the opportunity to efficiently maximize your income base growth. This benefit is designed for stronger guaranteed income, even when plans change.
2. It helps cover illness and long-term care
According to the National Council on Aging, nearly 95% of adults age 65 or older in the U.S. have at least one chronic condition, and nearly 80% of have two or more.¹ The U.S. Department of Health and Human Services revealed the average 65-year-old today has a 70% chance of needing some type of long-term care in their remaining years.²
You can benefit from considering a solution that helps manage these future possibilities. Adding a living benefit rider to a variable annuity can offer flexibility by using part of your policy to pay for long-term care while you are still living. It's another way you can reduce risk in your retirement strategy.
3. It's flexible as your needs change
A lot can change in 10 years: unexpected illness, job loss, divorce or even the loss of a spouse. All these could affect you between the time you purchase an annuity and when you're ready to take income. These are difficult but important factors to consider and why you may need more flexible options as you plan for retirement.
Some variable annuities can come with lifetime income benefits that help manage life's "what-ifs." If you add a living benefit, you won't be locked into irreversible choices when life happens. You can make a better decision for yourself when your situation improves.
4. It can help fill potential legacy planning gaps
If your legacy planning needs aren't fully covered by your existing life insurance policy, consider a variable annuity's death benefit. A variable annuity is invested — and hopefully reaping the benefits of time in the market. So, your contract value is more likely to last well into retirement.
This increases the likelihood of passing a death benefit on to loved ones and may offer a better outcome compared to other fixed solutions. Certain variable annuities may offer death benefit options that let you lock in additional death benefits to help you achieve your legacy goals.
5. It may offer more than your current annuity
With more competitive rates, now might be a great time to review your existing guaranteed retirement income amounts. This can help ensure you're on track to get the highest payout possible. If it's in your best interest to make the switch, consider looking into a 1035 Exchange. You can use it to transfer funds from an existing policy to a new one without tax implications.
Your existing annuity solution might not be the most efficient or comprehensive. A variable annuity is designed to deliver more guaranteed income, more flexibility for when life happens and more legacy planning solutions for you.
Considering a variable annuity as part of your retirement strategy
If you're interested in a solution that provides the opportunity for tax-deferred, market-based growth and options for guaranteed lifetime income, you may want to consider a solution like a variable annuity. Contact your financial professional to learn more about this option and how it may be able to meet your retirement goals.
Explore these additional topics as you consider annuities:
- Annuities can help meet your retirement needs
- 3 key considerations for selecting an annuity
- Annuity payment options
¹ https://www.ncoa.org/article/get-the-facts-on-healthy-aging
² https://aspe.hhs.gov/topics/long-term-services-supports-long-term-care
As you determine what annuity might be right for you, remember they are intended as vehicles for long-term retirement planning, which is why withdrawals reduce an annuity's remaining death benefit, contract value, cash surrender value and future earnings. Withdrawals from annuities may also be subject to income tax and, if taken prior to age 59 ½, an additional 10% IRS tax penalty may apply. Because Protective and its representatives do not offer legal or tax advice, it is important that you talk with your own legal and tax advisor about your specific tax situation.
Variable annuities are considered securities contracts and are regulated by federal securities laws and must be sold with a prospectus.
Investors should carefully consider the investment objectives, risks, charges and expenses of a variable annuity, any optional protected lifetime income benefit, and the underlying investment options before investing. This and other information is contained in the prospectuses for a variable annuity and its underlying investment options. Investors should read the prospectuses carefully before investing.
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