Until now, your goal has been to grow your investments as much as possible. Once you hit Medicare and retirement age, at least 75% of your investments should be in a safe place. An annuity is a great, zero-risk way to make a decent return on your hard-earned cash.
There are certain types of annuities that we do not recommend for retirement age, which is why we only offer 1 type of annuity: Multi-Year-Guaranteed Annuities (MYGAs).
This means that your investment is in a multi-year program, usually 5 years, and the interest rate is fixed, meaning it’s guaranteed.
There is zero risk with a MYGA annuity, and you will know exactly how much interest you’ve made at any given time.
Q Aren’t annuities complicated?
A When it comes down to it, Multi-Year-Guaranteed Annuities are extremely simple. MYGAs are easy to understand, and if you don’t understand something – especially when it comes to your money – you aren’t going to do it. We find that when you sit down and talk with an agent, you’ll be surprised at just how simple these annuities are.
Q What happens to the annuity when I die?
A If you die, there’s a beneficiary who receives the proceeds. If you’re married, you can continue the annuity in your spouse's name, which is called spousal continuation.
Q Do I get any access to the money while it’s in the annuity?
A Most MYGAs give you access to the interest, and most also give you access to a withdrawal privilege. The maximum withdrawal amount is usually 10%, which is just an added feature you can tack on when you sign up.
Q Won’t I make a lot more in the stock market?
A Most of the time, you will make more return in the stock market. However, there’s risk involved. That’s the trade-off – with a MYGA, there is zero risk. Every time you go to bed, you’re going to make a little bit of money. It will never go the other way.
Q Don’t annuities have high, hidden fees?
A There are no hidden fees with MYGAs. Your entire deposit will start earning money the next day. There are surrender charges, which means you will surrender some of your deposit if you cancel the contract before it’s up. You agent will lay this out for you depending on which carrier you decide to go with.
Q How do I know the agent isn’t just selling this to me for the commission? Aren’t annuities high commission?
A The kind of annuities we offer are not typical annuities. They are short contracts with a fixed interest rate, and the bottom line is that they just aren’t high commission. We’re working with retirement-aged people who shouldn’t be putting their money in a 12-year annuity. It’s not in their best interest. We choose MYGAs because they’re the best and safest option for you.
Q Don’t you need a lump sum to get an annuity?
A You do need a lump sum to begin, but it doesn’t have to be high. Most annuities have a $5,000 minimum to get started. Some go even lower than that.
Q I’m not a conservative investor. Why would I choose an annuity?
A Having all of your money at risk, especially at retirement age, is risky. There’s wisdom in not having all of your money in danger. Even if you have money in the stock market, it’s very wise to make sure at least some of your money is in a safe, zero-risk place.