There are those who believe annuities are sold to senior citizens who did not understand what they were buying or the contractual ramifications of their decisions. This is not the fault of the senior citizens…it is the fault of the agent who thought more about himself instead of the needs of the client. When I began my career in financial planning, I made myself a promise: “Never sell a product to a client that doesn’t fit their financial needs.” I was, and still am, true to that promise.
There are those who believe in the blanket statement that annuities should not be purchased by anyone over 70…that is
In the world of financial planning and investment advising there is a need to have safe money options regardless of age. The key relies on the fact that the financial product should provide a solution to a financial need.
“Guarantees, including optional benefits, are backed by the claims-paying ability of the issuer, and may contain limitations, including surrender charges, which may affect policy values.
Annuities by their name are designed to be income producing financial instruments. They may also be very effective as estate planning tools. Unfortunately, bureaucratic regulators have limited the purchase of annuities for senior adults approaching or exceeding eighty years old. Why wouldn’t someone in their eighties not be able on their own or with the consent of their families purchase an annuity when they want safety of principal, a higher growth potential than the local bank, a 5% to 10% bonus and all of the account value to bypass probate and go directly to their heirs with no surrenders or penalties? The main reason is that senior citizens are discriminated against by overzealous regulators that in the name of protection have caused the door to be shut on this legitimate purpose for annuities in estate planning.
Age limiting also applies to younger individuals. Some insurance companies pull back on benefit eligibility for younger individuals which seem to “promise too much” based on today’s interest rate environment when these benefits are extrapolated out over a younger person’s lifetime.
What is the best age?
The most common age seems to be between 45 and 65, but it depends on the type of annuity and your planned retirement age. Often, people in their 40’s delay making plans for their retirement…delaying those important decisions until later. This is the age when retirement planning should be given priority in looking forward to those retirement years. However, it is most common for any formal retirement planning to begin 1-15 years prior to retirement. Annuities excel at keeping retirement dollars safe and secure while providing growth for retirement income. The reasons for future retirees considering annuities for their income foundation or “if they cannot afford to lose principal” or if they “do not have time to recover from losses in riskier financial choices” —then annuities are always prudent alternative for consideration.
If you don’t have a financial profession, search for one that will listen to your needs and then work with you to find proper solutions. The decisions you make on what to do with your dollars are ultimately your decisions. Work with someone who has your goals in mind and you have a much better chance of meeting your retirement target. Part of that target or goal should include remaining retired after your retirement date.