Top 10 Questions to Ask
One of the key benefits of an annuity is peace of mind. But even if you have the right annuity, it will only be worry free if you understand why you purchased it and are sure you have made the choice that's right for you.
Answering these 10 questions will put you well on your way to selecting an annuity that best suits your needs:
1. What are my retirement goals?
Everyone is different, so this question is specific to you and your situation. What would you like to do in retirement?
Some people dream of retiring in a cabin by the lake or moving to a warmer climate, like Florida or Texas. Others hope to travel, to begin a second career, or to leave money to their heirs.
Still others are content to keep life simple. Imagine your life into retirement; it will help to determine how much cash you should keep on hand and how much you can put into an annuity.
Further, your goals will vary depending on your stage in life. A 60-year-old who is entering retirement might look at this question quite differently from someone who is 75 and already retired.
2. When do I expect to retire?
Gone are the days when 65 was the magic retirement number. For many, an early retirement is an attractive and attainable goal.
For others, work will continue well past 65 – either because of finances or because they just love what they do. Estimating when you'd like to retire is a critical step in being able to calculate the right annuity to buy.
3. How long do I expect to live in retirement?
Today we're living longer and it's common to be in retirement for 25 years or more. Of course, no one can really predict the future.
But projecting your life expectancy will help you estimate how much savings you'll need to sustain your retirement lifestyle. There are some factors you might consider.
Do you have any health conditions or concerns? Did your mom and dad live well into their 90s? People are living longer than ever before, so there is cause for optimism, but it’s equally important to be realistic.
4. Do I need supplemental retirement income?
You can use an annuity to supplement your other sources of retirement income by providing payments that cannot be outlived. These annuity payments can help cover expected living expenses.
Calculating the "gap" between available retirement income (Social Security, a pension and savings) and your essential living expenses (housing, insurance, etc.) can help determine the value that an annuity can provide – and can also help you determine how much you will need in payouts from your annuity.