Podcast Episode 381: Are Annuities a Good Source of Retirement Income?
Building a solid income plan is a foundational piece of retirement planning and there are a variety of ways to create those income streams. One product that often comes up during meetings is the annuity because of its ability to produce guaranteed income to replace your paycheck, but is it a good choice for your portfolio?
Jake Doser, CFP®, CPWA® and Nicholas J. Colantuono, CFP® join the Money Wisdom podcast to dive into a question we received: a friend told me that I should think about an annuity for retirement income. What do I need to watch out for with these products while I’m shopping around? If you’re considering annuities as part of your retirement strategy, this episode is worth watching.
Annuities are a popular choice for those looking to secure a steady income in retirement, but they are not one-size-fits-all. Jake and Nick break down the two main types of annuities: income-focused and growth-focused. Income-focused annuities, like Social Security or pensions, provide guaranteed payments over time, offering financial security. However, they also lock your money away, limiting flexibility. Growth-focused annuities, on the other hand, aim to grow your investment over time, with varying levels of risk and reward.
Before determining what’s best, you have to make sure you are doing the proper plannig. As Nick points out, “What everybody needs in retirement is income, but what they really need is cash flow.” Understanding your unique financial goals and needs is crucial in determining whether annuities are the right fit for you. Jake adds, “No one investment is right for all of your money,” highlighting the need for a diversified investment strategy.
Beyond annuities, we explore the pros and cons of pension options. If you have a pension with a lump sum option, deciding between taking the lump sum or opting for monthly income requires careful consideration. The flexibility and control offered by rolling a lump sum into an IRA can be beneficial for many, but it’s essential to weigh the tax implications and your income needs.
By understanding the nuances of annuities and the importance of a tailored investment strategy, you can make informed decisions that align with your retirement goals. For those ready to take charge of their retirement planning, we offer a valuable resource: the “Are You Ready to Retire?” starter kit. This kit helps you assess the characteristics your portfolio needs to achieve your retirement goals. To get your starter kit, simply text the word KIT to 800-757-0436.
Here’s what we discuss in this episode:
0:00 – Intro
1:29 – Today’s question
3:20 – Types of annuities
5:22 – Goals for your money
6:47 – Other considerations
Information presented in our podcasts is considered current as of the created date. Over time, some information presented may become stale. We recommend you consult with your Financial Professional before making any changes based on information contained here.
Johnson Brunetti is a marketing name for the businesses of JB Capital and JN Financial.
Investment Advisory Services offered through JB Capital, LLC. Insurance Products offered through JN Financial, LLC.
The guarantees provided by any type of insurance contract are based on the claims-paying ability of the insurance company.
Related Resources
-
What to Consider Before Moving in Retirement
If you have the liberty to relocate in retirement, does that mean you should? Maybe you’re a snowbird who wants to live down South full-time, or maybe you want to stick it out in the cold and spen… -
Dodging the Tax Torpedo
When envisioning the next chapter of your life, the impact of taxes can often be overlooked or forgotten altogether. The reality is, without the proper planning, you may be at the mercy of an impe… -
How Can You Understand and Improve Your Credit Score?
In retirement, your credit score is still relevant in achieving and maintaining financial independence. The question is, how can you best understand and improve your score to reap the benefits of … -
RMDs and You
Tax-deferred retirement accounts like IRAs and 401(k)s have allowed your savings to grow without any immediate tax burden. However, once you reach a certain age, the IRS requires you to begin maki… -
How to Financially Plan for a New Presidential Administration
A new presidential administration is set to take office next year, and while there are a lot of uncertainties around what a second Trump term could bring, it’s important to stay the course in your… -
Magic Retirement Number
Do you know your magic retirement number? This is the amount of money you need to retire – and it’s different for everyone. Let’s explore how to calculate your number, how it compares to the rest … -
Should I Consolidate My Multiple 401(k) Accounts?
If you’ve contributed to multiple 401(k) or other employer sponsored plans over the years, you may be wondering about today’s question, is it time to roll your old accounts into an IRA? In this we… -
Social Security Review: How to Get it Right
Social Security may be just one piece of the puzzle, but the decisions you make about when and how to claim your benefits can be crucial to the stability and strength of your overarching retiremen… -
When Should I Consider Borrowing Against My Assets?
Welcome back to the Money Wisdom Question Series. Today’s question is, when would it be beneficial to borrow against my assets? While there are ways to borrow against assets such as a vehicle, we’… -
Reaching the Retirement Mountain
The journey to and through retirement is like climbing a mountain. Climbers must diligently prepare for every aspect of their voyage – the climb up, reaching the top, and coming back down. You wan…