- 2-Minute Article
Essential Retirement Tools You May Not Know About
Here’s why annuities and life insurance play a big role in a well-rounded portfolio.
You’ve worked hard, saved diligently, and invested wisely—the essential steps of traditional retirement planning. But retirement is changing. People are living longer, with a quarter of 65-year-olds today expected to live past age 90.1 At the same time, only 18% of private industry workers have a company pension to provide secure retirement income — down from 35% in the early 1990s.2
Faced with these trends, you may wonder if your savings will last as long as your retirement does. But you don’t have to worry. You can take additional steps that will help protect the hard work you’ve done through retirement planning.
Enter annuities and life insurance: these financial tools add an appealing mix of growth potential and tax advantages to your retirement portfolio. Consider two benefits of these tools.
1. Guaranteed lifetime income payments throughout retirement
Markets ebb and flow, sometimes unpredictably, and if most of your savings are tied up in the market, your income may take a hit down the road. Annuities address this uncertainty by generating a stream of guaranteed lifetime income so you can meet your retirement goals and cover your expenses — no matter the market conditions.
There also are annuities that allow your retirement savings to grow over time — increasing the amount of steady income you will receive later — while offering protection from market drops. Many investors are willing to give up some growth potential in order to protect themselves from downside losses. If you feel the same way, this type of annuity might appeal to you.
With these options to choose from, putting a portion of your savings into an annuity can be a good strategy to ensure a steady stream of income that can bring you peace of mind throughout retirement.
2. Tax-free income
Life insurance policies are designed to help you provide financially for your loved ones after your death. But did you know you also can use life insurance for retirement? With permanent life insurance, you can access accumulated cash value to cover retirement expenses without generally having to pay any tax on the distribution, although it does reduce the cash value and death benefit amounts.
Life insurance will also leave a legacy, which means you can focus the savings in your other accounts on retirement living expenses instead.
Talk with your financial advisor about the role annuities and life insurance can play in your portfolio. When added to the savings you already have, these financial tools can provide growth potential and tax advantages — valuable components of any retirement plan.
To better understand different types of annuities and related terms, download our
Quick and Easy Guide to Annuity Terminology.