This buying guide is intended to provide objective and actionable information for people who are or may consider purchasing an annuity.
The following are some simple points to consider:
- While annuities come in many different flavors which can be put to multiple uses, the bottom line is that annuities are fundamentally about generating income to support sustainable retirement spending.
- Extremely wealthy individuals will have little need for concern about sustainable spending rates during retirement. Annuities are largely irrelevant to these people.
- At the other end of the spectrum, millions of people will rely solely on Social Security as their source of retirement income. Annuities will not be applicable here since savings are required to fund a purchase.
- For the millions of people in the middle, retirement spending will likely consist of Social Security, the income that can be generated from personal savings, and possibly—although increasingly rare—pension income. If you fall into this broad category, you must carefully consider how annuities can be used to convert your retirement savings into a stable source of income that plugs potential spending gaps and is guaranteed to last a lifetime.
When writing this guide, I think of providing guidance to a parent who, after working and saving their entire life, is ultimately responsible for the daunting task of arranging their personal finances in a manner that will support years of comfortable retirement.
There is quite a bit of information throughout AnnuityDigest.com. This material, however, is focused on buying guidance and is written for people who may have little or no knowledge about annuities.
To use this buying guide, simply click on any of the chapter links in the table of contents that appears in the left column. Some sections have additional sub-chapters which will appear as links under the main chapter heading. There are also links at the bottom of each page that allow you to navigate from your current page to: the previous chapter; the following chapter, or; the top of the current page.
I hope you find this information useful. Please feel free to ask questions, make suggestions, and provide comments. I welcome input and contributions from the community as this buying guide is a work in progress that will continually change and improve with additional feedback.
Thomas Cochrane, CFA
Founder and Publisher, Annuity Digest