Life Annuities: avoid the risk of outliving your assets

TAMPA, Fla. - April 28, 2013 - PRLog -- Americans can avoid the risk of outliving their assets by saving more, working longer, investing wisely, delaying Social Security and buying a life annuity.

Annuities can be an important part of retirement if you don’t have a pension. Here is how an annuity works. You give the insurance company a lump sum payment in exchange for a guaranteed monthly payment for the rest of your life. This might be a good way to go if you don’t have a pension and you want the peace of mind that comes with a guaranteed minimal income.

According to experts consulted by GAO for its report, retirees ought to do consider the following:

Many retirees should delay taking Social Security to increase payments for life.
Depending on net worth, households also should consider buying a life annuity, particularly if they don't have a traditional pension that guarantees sufficient income.
Middle-income households, such as those with $191,000 in financial assets and without a traditional pension, should consider using a portion their savings to purchase an inflation-adjusted annuity.

Annuities can be quite complicated, and there's plenty an investor can get wrong. The word "annuity" describes at least five different kinds of products that have little in common besides the name, the fact that they are issued by insurance companies, and give the owner the option to convert his or her money to a guaranteed income stream at some future date.

Annuities should be a long-term vehicle to provide a base guarantee of return and lifetime income in retirement above CDs or other guaranteed income products.

Annuities are only as safe and conservative as the company issuing them. They will let you sleep at night. By investing in an annuity, you may be able to invest more aggressively in other parts of your portfolio.

Life income annuities pay out regularly for as long as you live. They pay out regardless of the market. And as long as you’re comfortable with the fact that you can’t access the money invested in a life income annuities, they can be a great deal and provide the income you need for the rest of your life.

Where you should look for advice to shop for an annuity?

Do not go to banks, they work to reach their quotes and do not provide many options.

Look for an independent and fiduciary financial advisor. He/she will help you understand the pros and cons of an annuity and if it is right for your portfolio.

Also an independent financial advisor will shop among many insurance companies, giving you more options/cost/fees.

Mintco Financial of Independent Advisors can help you with your questions.

Call 813-964-7100 or visit www.MintcoFinancial.com