Wamhoff Financial Planning & Accounting: Fixed annuities

ST. LOUIS, MO (KTVI)- Annuities are often misunderstood, loved by some and avoided by others. While they fit many investors, annuities can be shocking to those who are emotional investors in the market. Yet those who have bypassed some of the challenges annuities create, they’re enjoying their upside after learning more about whether or not it’s a good fit in their portfolios.

Financial Planner Matt Allgeyer tells us more.

A fixed annuity is an insurance product that insures against you outliving your money. Fixed annuities are not tied to the market, so they`re not susceptible to market volatility.

Advantages of a Fixed Annuity:

  • Because there is no correlation to the market, the value will not fluctuate based on market conditions. This means it will not change the dynamic or balancing of your portfolio.
  • A fixed annuity can offer predictable income as well as predictable rates of return with, in some case, no loss on the principal invested in the annuity.
  • Those who do not want to take market risks will typically incorporate a Fixed Annuity into their overall planning.
  • An annuity can generate income in retirement that you cannot outlive.
  • Less money management is necessary in most fixed annuities.
  • An annuity can provide deferral of growth on investments until you take the funds out.
  • Drawbacks of a Fixed Annuity
  • Annuities normally have high surrender fees, so though they may offer income, they are very hard to leave.
  • Income annuities generally charge annual fees

For Consideration:

  • Always review your unique situation with an advisor or finance professional.
  • Explore how a fixed annuity may play a role in your overall financial plan based on your goals and risk tolerance.
  • Be sure you have a clear understanding of the fees and how they work.