4 Reasons To Use An Annuity In Retirement

Retirement is a critical time in your life, and you need to ensure that you have enough income to live comfortably. One investment option that you may want to consider is an annuity. Below we will discuss the four reasons why you should consider an annuity for retirement.

  1. Guaranteed Income for Life: An annuity is the only investment option that can guarantee you a lifetime stream of income. Even though you can try to invest in the stock market or rely on dividends, there is no guarantee that these options will work out. If the market turns sour, it can significantly affect your retirement accounts and throw off the average return you need to take out money each year. A guaranteed income stream will ensure that you have a steady flow of money coming in each month. Studies have shown that people with a guaranteed income stream in retirement live longer and happier lives. All of the annuities offered by DRS provide guaranteed income.
  2. Protection of Your Money: While most annuities are designed to provide you with a guaranteed income for life there are some annuities that are created solely to offer you protection. They do not payout guaranteed income, but their job is to protect you from the market. These annuities guarantee that your money will not lose when the market goes down. Some annuities track the market index, so in a good year, you’ll get some of the gains, and in a bad year, you lose nothing. If you’re looking to protect your money in retirement, this type of annuity can be an excellent option for you. DRS doesn’t offer any of these types of annuities so if you are interested you have to get it from the private market.
  3. Tax-Deferral Benefit: Annuities offer a tax-deferral benefit similar to the ones that exist in retirement accounts. This means as your money grows you don’t owe taxes at the end of each year. If you’re using money from an after-tax source you still get this benefit. This tax-deferral benefit can help the growth of the account since eliminates the annual interest, dividend, and capital gains taxes that you would normally have to pay each year. Keep in mind that the trade-off is you will still owe federal taxes on all of the growth. So whether or not the tax deferral feature will benefit you is subject to your individual tax situation.
  4. Eliminate Fees and Expenses: While it is true that some types of annuities can be expensive, not all of them are. If you’re looking to eliminate or reduce fees and expenses from your retirement portfolio, an annuity may be a great option for you. Some annuities have no fees at all such as any offered by DRS or the majority of protection-focused annuities in the private market. So while the media and large financial institutions like to blast annuities for high fees, know that they are only focusing on one specific type. The truth is these companies secretly love annuities because they also have high fees and it’s a convenient way to make their services seem cheaper.

An annuity is an investment option that you should consider for your retirement. It provides you with a guaranteed income stream, protects your money, offers a tax-deferral benefit, and can help eliminate fees and expenses. When choosing an annuity, it’s essential to research and choose a reputable insurance carrier to ensure that you’re getting the most out of your investment.

Share this

More Articles:

Free Washington State Retirement Planning Community

Join our free community and gain exclusive access to expert financial insights & personalized tools tailored for Washington State employees. Whether you’re just starting out or nearing retirement, our community offers the resources you need to confidently plan your financial future. Connect with like-minded individuals, ask questions, and stay informed about the latest strategies to maximize your retirement benefits. Start your journey today and take control of your financial goals—it’s completely free!

Join Free Today

7 Money Murdering Mistakes Teachers Need To Avoid

  • 3 Potential Problems Your Pension Creates that can Cause you to pay more in taxes and healthcare
  • The TRUTH about tax deferred savings & how you could end up owing over $1,000,000 in taxes!
  • Why so many teachers end up working longer than they really need to & What you can do add years to your retirement
Download Free Copy