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While the economic outlook is a bit tumultuous overall, the retirement planning landscape is particularly uncertain right now. After all, the stock market has been volatile recently, making it tough for soon-to-be retirees to ensure that their investments will perform as expected, and there are ongoing questions about the long-term viability of Social Security, too. So, when you add in the other issues, like fluctuating interest rates, persistent inflation concerns and an aging population grappling with inadequate savings, it makes sense that more Americans are considering annuities as a way to guarantee their financial future.
But here’s the thing about annuities: They’re not the right move for everyone, despite what they may seem like on the surface. These unique insurance products, which promise to convert a lump sum into regular payments for life, can be incredibly valuable for the right person at the right time, especially those who prefer reliability over growth. However, purchasing can also be a costly mistake for others, as they may be locking up money that could be working harder elsewhere or creating unnecessary complexity in an otherwise straightforward financial plan.
So, while some people may get big benefits from investing in an annuity this August, for others, waiting — or choosing a different financial strategy entirely — could be the wiser move. Who should consider an annuity now, though, and who may want to steer clear?
Compare your annuity options and find the right fit today.
Who should buy an annuity this August?
Here’s who may benefit from purchasing an annuity right now:
Near-retirees who want to lock in high rates now
Annuity payouts are directly tied to interest rates, so higher rates mean higher monthly payments for life. That means if you’re within a few years of retirement and are looking to secure a guaranteed income stream, this could be an ideal time to act. Right now, payout rates for fixed and immediate annuities are still elevated due to the Federal Reserve’s prolonged high-rate environment. As a result, your lump sum investment could translate into a higher monthly income than it might if you wait to buy until rates eventually decline.
For example, a 65-year-old who purchases a lifetime immediate annuity today could receive several hundred dollars more per month than someone who bought the same product just a couple of years ago when rates…
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