- Inflation: Historically, the cost of goods has increased about 3% per year. With inflation moving at this rate, you may not be able to purchase as much five years from now for the same amount of money as you’re buying it today. This is called purchasing power risk.
- Longevity: As medical advancements continue to improve your prospective lifespan, you run into longevity risk, meaning you may outlive your money.
- Volatility: None of us can predict what will happen in the financial markets. If volatility strikes near the end of your working years, you will be more affected than if it strikes many years before you retire.
With company pensions all but disappearing and the future of Social Security uncertain, it’s prudent to look for investment solutions that can help protect against these risks and supplement your retirement income.
There are several kinds of annuities, all of which have pros and cons. Some annuities are immediate, and others deferred. Some provide fixed payments and others variable (usually based on market performance). And some provide lifetime benefits while others pay for a certain amount of time. While each has its place, the only way to know if an annuity is appropriate for you is to sit down with a financial advisor.
We would love to speak with you about your investment options for generating retirement income. Please contact us to learn more!
