Annuity Risks

You exchange control of your assets for a predictable and sustainable retirement income for your liftime.

Annuity risks. On longer-term annuity contracts especially immediate annuities there are risks that interest. Safety of principal and guaranteed payments is the strong suit of an annuity. The primary risk of most annuity payouts therefore is inflation.

Risk that investments will not perform as expected and of course credit quality risk is the main risk that caused the failure of some well-known companies in recent years. Variable annuities carry risk because they have the potential for you to actually lose money. A variable annuity regulated by the Securities and Exchange Commission SEC is a retirement product in which funds are directly tied to the market.

A death benefit is a payment that the insurance company will make to a beneficiary if you die. For single premium immediate annuities SPIAs cash flow is guaranteed by the issuer for the life of the annuitant. 4 Common Concerns About Annuities.

Taking money out of an annuity contract may result in taxes penalties and other complications on your tax return. You lose control of your assets. 5 However VAs are risky products.

It can be mitigated or even eliminated by using a portion of your savings to buy life annuities. Less capital Intensive than traditional fixed annuities. For these reasons longevity is one of the top risks for retirees.

Very high fees even 50bps. Living on Social Security alone is inadequate for most people. Below are some most common disadvantages when purchasing a life annuity.