One of the principal tenets of investing is that no one single investment is right for everyone. Every investment has certain characteristics, risks, and objectives that must match those of the investor, and fixed annuities are no different. Although fixed annuities have become more popular in light of the recent financial turmoil and the carnage it has left behind in retirement accounts, investors should still take care in considering whether they are best suited for them.
As economic uncertainty increases, concerns over financial security mounts causing people to look for alternatives that provide more guarantees and predictability. Currently, more than 50% of pre-retirees fear that their assets won’t generate the income they need for their lifetime. Because fixed annuities protect principle while providing a guaranteed income that can’t be outlived, investors are looking to them for at least a portion of their retirement portfolio.
Before expending the time and effort exploring specific fixed annuity products, you should assess your own situation to determine if the benefits of fixed annuities can meet your particular needs. Here are five questions you should ask regarding their situation before considering fixed annuities: