If you are about to retire or already retired, chances are you've been approached or heard a pitch from an Annuity Salesman. (I'm referring to after market annuities in this blog. Not the annuity option available from your NRECA R&S Plan).
Annuities come as fixed, variable, guaranteed, indexed, 10 year, 5 year, etc... but the sales pitch is usually the same. They pitch the product as no risk, safe money, only get market upside, no market downside, lifetime income, death benefit, etc, etc....So you are probably wondering are annuities a good investment?
Let's address that statement right now. Annuities are NOT an investment. Say it with me. Annuities are not an investment. One more time. Annuities are not an investment.
Now that we are on the same page exactly what are annuities?
What Are Annuities?
Annuities are Insurance Products sold and backed by Insurance Companies. I repeat. Annuities are an Insurance Product sold and backed by Insurance Companies. Is this bad??? Not necessarily.
Annuities can serve a purpose in retirement depending on what your goals are. Used in the right situation they can be helpful. But again they are not investments. They are Insurance Products.
Think of why you buy insurance for anything? You buy insurance because it transfers risk from you to the Insurance Company. That's it. Same with an Annuity. You buy one because it transfers risk from you to the Insurance Company. The Insurance Company promises you a "safe" return with no risk. Who doesn't want that?
But remember any annuity that suppresses volatility also suppresses your long-term return. That's how the game works.
At 80/20 Financial Services, we believe annuities can serve a place in your retirement portfolio. But not as your entire portfolio. We believe that real wealth, an income one doesn’t outlive, can only be achieved through a program of lifetime investing in quality companies.
You Need A Plan
Retiring - without a plan - is simply a plan to run out of money. Your NRECA R&S Pension is not a plan. Your NRECA 401k is not a plan. Those are only pieces in the retirement planning puzzle.
At 80/20 Financial Services we specialize in helping cooperative employees plan their retirement. We can show you how to turn your 401k and your R&S lump sum into a stream of income just like when you were working while also helping you achieve your desired financial outcomes in retirement.
The consultation is free and without obligation. Contact us to set up a consultation.
For more articles about retirement planning and investing click here.
80/20 Financial Services is an Independent Registered Investment Advisory Firm. We help Electric Cooperative Employees create their retirement income and investment plans. We turn your NRECA 401k and R&S Pension into a plan that will provide you lifetime income and can change your family's legacy.