What is an Annuity?
An annuity is essentially an agreement you enter into with an insurance company. You make payments to them, either as a single lump sum or as regular installments, and in return, the insurance company commits to providing you with a regular income stream in the future.
Why Consider an Annuity?
Potential for Guaranteed Income
Unlike investments like stocks, which can fluctuate in value, annuities can offer a guaranteed income stream. This can be particularly appealing to retirees seeking financial stability.
Protection Against Market Volatility
The value of annuities is not directly tied to the stock market, so they can provide a degree of protection against market downturns.
Hedge Against Inflation
Bank CD interest rates are often low, and when inflation rises, the purchasing power of your income can erode. Annuities can offer a way to potentially outpace inflation.
Relevance of Annuities in North Texas
Financial Stability Concerns in Retirement
Studies indicate that many people are anxious about having enough money in retirement, and this anxiety is heightened in areas like Dallas/Fort Worth, which aren’t ranked highly for retirement affordability. Annuities, as a financial tool, can play a role in addressing these concerns.
Need for Informed Financial Planning
Given the financial challenges retirees and soon-to-be retirees face in North Texas, it is crucial for them to explore all their options to ensure financial stability.