EVEN IN RECESSION, ANNUITIES ARE SAFE, SOUND AND RELIABLE
As our nation continues to struggle through the worst recession since the Great Depression, many Americans are gravely concerned about their financial future. Soon-to-be retirees have watched their nest eggs diminish in recent years, and quite a few of them have decided to postpone retirement because they simply cannot afford to stop working. It's no surprise that studies have shown a steady decline in worker confidence about retirement preparedness over the past two years.
However, despite the recent turmoil in the market, consumers are still confident about at least one type of retirement vehicle: annuities. As a matter of fact, nearly 8 in 10 annuity owners say that annuities make them feel more secure in times of financial uncertainty, according to a study by The Committee of Annuity Insurers, the Gallup Organization and Mathew Greenwald & Associates.
Safe and sound. Based on the study, almost 8 in 10 annuity owners say that annuities are still secure and safe and are an important source of retirement security—even in these tough financial times.
It's really no wonder why investors see annuities as safe, stable options. First of all, annuities are offered by insurance companies—not banks or brokerage firms. Because insurance companies offer conservative savings options that carry very little risk, they have a historical record of stability.
Secondly, each annuity product offered by an insurance company must be approved by the state Insurance Commissioner, which ensures that these products offer the utmost stability. Almost 9 in 10 surveyed annuity owners say that annuity contract guarantees are a very important benefit of the product.
Reliable retirement income. According to this recent study, a whopping 86% of annuity owners believe that annuities are an effective way to save for retirement and 89% say their annuity was a safe purchase. More than three in four annuity owners say that they intend to use their annuities for retirement income. Because annuities offer a guaranteed minimum rate of interest, these products are particularly appealing to those saving up for retirement. Plus, annuity owners also enjoy the following benefits:
- Income tax deferral until withdrawal
- Penalty-free withdrawals to cover emergencies
- Protection from creditors (in most states)
- Complete control over their money if circumstances change
- Probate-free transfers at death
- The right to convert to a guaranteed lifetime income
Plenty of other uses. Although annuities are extremely popular with soon-to-be retirees, these products can be used for purposes other than retirement income. Based on the survey, 83% of annuity owners intend to use the income as a financial cushion in case they or their spouse live well beyond their life expectancy, and 81% say they save into an annuity because they don't want to become a financial burden on their children.
Because annuities are relatively conservative products, they are certainly not get-rich quick schemes. However, because they are stable, secure and reliable, annuities are ideal for retirement saving. Even in these uncertain economic times, the majority of investors still feel that annuities are a safe bet.
If you want to learn more about annuities, talk to your financial advisor or insurance agent.
Liquidated earnings are subject to ordinary income tax, may be subject to surrender charges and, if taken prior to age 59 1⁄2, may be subject to a 10% federal income tax penalty. Guarantees and payment of lifetime income are contingent on the claims paying ability of the issuing insurance company.