Is an Annuity Right for You? A Deeper Look

In the second part of the series on annuities, Trevor Lawson uses a framework from a Morningstar article by Christine Benz to help listeners determine if an annuity is a suitable tool for their retirement plan. Trevor discusses key questions to consider, such as whether you need guaranteed lifetime income to hedge against longevity risk, especially since pensions are becoming less common. He also examines the appeal of annuities for their ability to provide protection against market losses, but notes that this often comes with a cap on potential growth. The episode also explores the tax benefits of annuities, which offer tax deferral similar to a 401k or IRA, but highlights the distinction that withdrawals are typically taxed as ordinary income rather than capital gains. Lastly, Trevor emphasizes that a key consideration is the lack of liquidity, as annuities often have surrender periods during which accessing funds incurs a penalty. He concludes by stating that annuities are great tools for income and protection, but not for those seeking maximum growth or frequent access to their money.Reference: https://www.morningstar.com/retirement/is-an-annuity-right-youSecurities and investment advisory services offered through Osaic Wealth, Inc. member FINRA/SIPC. Osaic Wealth is separately owned and other entities and/or marketing names, products or services referenced here are independent of Osaic Wealth. Branch phone: 919-546-0400.