Spotts Insurance Services, LLC Blog
An immediate annuity can be your best option for a sure-fire way to get retirement income.
Here are some tips that can help you choose among different insurers..
Just as some banks pay higher rates for time deposits (CDs) or savings accounts, some insurance companies pay higher rates for annuities. Payouts can vary from 6% to 10%. Before investing, do your research and get quotes from different insurers.
A+ or Better Financial Strength Ratings
Stick to highly-rated insurers. Look for the issuing insurer's ability to make those promised payments to you in the future.. Stick to insurance companies that are stable enough to fulfill their commitments.
It makes more sense to go with a highly rated insurer than one with a low rating that's already showing signs of weakness.
Place your eggs in many baskets.
The principle here is the same as diversifying among many stocks and bonds rather than investing in the shares of a single company or bond issue. By spreading the money you plan to invest in an annuity among two or more highly rated insurance companies, you assure that your entire annuity stake (and your retirement income) isn't dependent on the fortunes of a single insurer.
Stay within state guaranty association limits.
There's no FDIC insurance for annuities, but there is a system of state guaranty associations that provides coverage from $100,000 to $500,000 for annuities, depending on your state. This protection applies per insurer. Make sure that the amount you invest with any single insurer falls within the coverage limit offered by your state guaranty association. For details about the coverage limits in your state, go to the site of the National Organization of Life & Health Insurance Guaranty Associations.
Whatever amount you decide to devote to an annuity, consider investing it over time. First, because the level of interest rates largely determines annuity payments. Investing over a few years reduces the chance that you'll put all your money during low interest rates and payouts.
Second, it can be hard to determine early in retirement just how much guaranteed income you'll require. Investing small amounts over time can give you a better chance to gauge your actual income needs -- and prevent you from investing more of your savings than necessary.
Preparing for your retirement can be daunting. At Spotts Insurance Services, LLC, we aim to provide comprehensive insurance policies that makes your life easier. You can get more information about our products and services by calling our agency at (570) 742-4500. Get your free quote today by clicking here.