Yusra3
VIP Contributor
Annuities provide lifetime guaranteed income, an attractive option for retirees worried about outliving savings. Right now, a combination of rising interest rates and mortality trends makes purchasing an immediate annuity advantageous for securing your retirement. Here's why:
Higher Rates Increase Payouts
Annuity income payments are based on prevailing interest rates when initiated. Current rising rate environment means purchasing an immediate annuity now locks in higher monthly payments versus a year ago.
Mortality Rates Lag Interest Rates
While interest rates have climbed, mortality rate assumptions used to price annuities take longer to adjust. This temporary lag lets you take advantage of higher payouts based on interest gains before insurance companies catch up.
Principal Protection From Market Volatility
Converting a portion of retirement savings into an annuity guarantees income for life that is unaffected by market declines. Provides peace of mind and reduces sequence of returns risk.
Advanced Ages Receive High Income Factors
The older you are when you buy an immediate annuity, the greater the monthly income because payments are based on a shorter projected lifespan. Maximizes payouts.
Cover Essentials With Annuitized Income
Use annuity payments to cover fixed retirement basics like housing, food, transportation. Allows investing the rest of savings more aggressively to pursue growth since basic expenses are met.
Diversification From Social Security, Pensions
Annuities provide another layer of diversified, reliable income alongside Social Security and any pensions. Lessens reliance on withdrawing from retirement accounts.
The current rising rate environment coupled with lagging mortality rate assumptions makes buying an immediate annuity in the near term more advantageous than waiting. Work with a fee-only certified financial planner to run the numbers and see if securing lifetime income via an annuity aligns with your retirement goals.
Higher Rates Increase Payouts
Annuity income payments are based on prevailing interest rates when initiated. Current rising rate environment means purchasing an immediate annuity now locks in higher monthly payments versus a year ago.
Mortality Rates Lag Interest Rates
While interest rates have climbed, mortality rate assumptions used to price annuities take longer to adjust. This temporary lag lets you take advantage of higher payouts based on interest gains before insurance companies catch up.
Principal Protection From Market Volatility
Converting a portion of retirement savings into an annuity guarantees income for life that is unaffected by market declines. Provides peace of mind and reduces sequence of returns risk.
Advanced Ages Receive High Income Factors
The older you are when you buy an immediate annuity, the greater the monthly income because payments are based on a shorter projected lifespan. Maximizes payouts.
Cover Essentials With Annuitized Income
Use annuity payments to cover fixed retirement basics like housing, food, transportation. Allows investing the rest of savings more aggressively to pursue growth since basic expenses are met.
Diversification From Social Security, Pensions
Annuities provide another layer of diversified, reliable income alongside Social Security and any pensions. Lessens reliance on withdrawing from retirement accounts.
The current rising rate environment coupled with lagging mortality rate assumptions makes buying an immediate annuity in the near term more advantageous than waiting. Work with a fee-only certified financial planner to run the numbers and see if securing lifetime income via an annuity aligns with your retirement goals.
