What Is An Annuity?

When you hear the word annuity, what do you think of? Is it good or bad? Here’s a very simple explanation.

For more financial planning tips and strategies, be sure to check out our blog at http://MoneyEvolution.com

Check out our Free Guides…

Money Evolution Guide To What Every Investor Should Know About Planning And Saving For Retirement
http://moneyevolution.com/free-guide

Money Evolution Guide To Understanding Your Social Security Benefits
http://moneyevolution.com/social-security-guide

Money Evolution Guide to Understanding and Managing Your Debt
http://moneyevolution.com/understanding-your-debt

Money Evolution Guide To Buying and Financing Your Home
http://moneyevolution.com/financing-your-home

Money Evolution Guide to Understanding Real Estate As An Investment
http://moneyevolution.com/real-estate-investment

Money Evolution Guide To Understanding Your Taxes
http://moneyevolution.com/understanding-your-taxes

Money Evolution Guide To Understanding the Total Cost of Car Ownership
http://moneyevolution.com/understanding-cost-car-ownership

Follow Us On Facebook - https://www.facebook.com/moneyevolutionhome/
Twitter - https://twitter.com/billlethemon
Linked In - https://www.linkedin.com/in/bill-lethemon

If you have any questions about this, or any of my other videos, feel free to contact me at any time.
Email Me at bill@moneyevolution.com
Or Call My Office at 248-731-7829

Today I'm going to be answering the question, "What is an annuity?"

This video is going to be part of a little series that I'm putting together where I'm going to be talking all about annuities. I know there's a lot of people out there that may have some pre-conceived ideas about what they think an annuity is. Some people automatically dismiss them and say they don't care for annuities. Other people love annuities. It's probably one of the most heated debates out there in terms of investments. So hopefully this video series is going to help clarify and clear up any confusion that you might have and hopefully educate you in a way that's going to give you the right tools to ask the right questions if you're considering to buy an annuity.

So, what is annuity? Well, very simply put, an annuity is a contract issued by an insurance company, and I believe there's three primary reasons why somebody might buy an annuity.

The first reason is that they want to protect a portion of their retirement savings, and depending on what type of annuity you're looking at, some annuities do a very good job of this and they have some principle protection features. Of course, you always want to pay very close attention to the company that's issuing the annuity and look at their creditworthiness, because they are not FDIC insured, like certificates of deposit. They're not issued by the federal government, so you have to really look at the insurance company's credit quality because they're the ones that are going to make the guarantee.

Number two is tax deferral. If you're somebody that's already maxed out all of your other retirement savings options like 401Ks and IRAs and Roth IRAs, and you're still looking to defer some money for your retirement where you don't have to pay taxes on that every year, an annuity might fit into that category, and some annuities can do a very good job of this in terms of offering you some investment selection within the annuities, again some of those protections like we just talked about there, but tax deferral might be something that could be a reason why some people might want to look at that.

The third reason that I believe is the primary reason why most people look at annuities, is for the guaranteed income streams that annuities might be able to provide. So we've talked about this on the blog several times that pension plans are literally going away. The number of people that have pensions today versus how many even had them 10 years ago or 20 or 30 years ago is obviously shrinking pretty rapidly here, so there's a lot of people that are looking for a way to supplement their income. They know they're going to need to take some withdrawals from the retirement accounts and an annuity might be able to produce that in a way that can provide them with some guaranteed income for life. That is probably the primary reason, and I came across this article recently in the Wall Street Journal and they were asking a question to Alicia Munnell, who is the director of the Center for Retirement Research at Boston College. She's also served as the Peter F. Drucker professor of management sciences at the Carroll School of Management, so a highly respected individual, but they asked her a question, "What is the single difference you see between retirees who are happy and those who are not?" And her answer to that is, "The key factor that comes out of research studies is whether or not retirees have a steady source of lifetime income to supplement social security.

Continued on blog...

Видео What Is An Annuity? канала Money Evolution