Annuities can be mysterious. You might even feel like they come with a hidden agenda. However, with proper planning annuities can be an appropriate solution for your portfolio and financial planning.  They can offer financial advantages such as guaranteed income or living benefits. Consider these eight reasons annuities annuity strategies relative to your situation and consult with your financial professional and tax advisor.

 

1. Social Security Maximization

Purchase an immediate annuity to provide current retirement income while delaying claiming Social Security retirement benefits to qualify and maximize the partially inflation-adjusted monthly Social Security benefit payment.

2. Tax-Deferred Accumulation

Use a deferred annuity for tax-deferred accumulation. Annuity earnings aren’t taxed until withdrawals happen or the buyer starts taking regular distributions.

3. Fund Essential Living Expenses

Purchase an income annuity or use the income options of a deferred annuity to help fund essential living expenses in retirement. This approach can free other assets for investing in potentially higher-yielding or inflation-offsetting asset classes.

4. Create Protected Income From Accumulated Assets

Transfer funds from a 401(k) or other qualified retirement savings plan to an annuity product to utilize the annuitization or optional income riders to turn accumulated funds into a protected, guaranteed income stream.

5. Create a Bucket Approach Using Retirement Funds

Purchase income annuities for the Income-Now Bucket, a deferred fixed or variable annuity for Income-Later Bucket, and a third bucket using the income options of a deferred fixed or variable annuity to satisfy required minimum distribution needs.

6. Create a Lifetime Income Stream

Exchange the cash value of an unneeded permanent life insurance policy for an annuity product using a tax-free exchange.

7. Supplement to Retirement Income

Use the annuitization and optional income riders of annuity products to create a protected flow of supplemental retirement income.

8. Income Planning for Small Businesses

Use income options of a deferred annuity to create a lifetime income stream for small, qualified plans by making the annuity an investment of the qualified plan.

 

 

Adapted from Think Advisor1

 

Securities offered through SCF Securities,Inc. Member FINRA/SIPC 155 E. Shaw Ave. Suite 102, Fresno, CA 93710 • (800) 955-2517 •Fax (559) 456- 6109. SCF Securities, Inc. and Creative Financial Strategies LLC are independently owned and operated. www.scfsecurities.com Note: Securities offered through SCF Securities Inc., Investment Advisory Services offered through SCF Investment Advisors, Inc. This document is for educational purposes only and should not be construed as legal or tax advice. One should consult a legal or tax professional regarding their own personal situation. Any comments regarding safe and secure investments and guaranteed income streams refer only to fixed insurance products offered by an insurance company. They do not refer in any way to securities or investment advisory products. Insurance policy applications are vetted through an underwriting process set forth by the issuing insurance company. Some applications may not be accepted based upon adverse underwriting results. Death benefit payouts are based upon the claims paying ability of the issuing insurance company. The firm providing this document is not affiliated with the Social Security Administration or any other government entity.

1 https://www.thinkadvisor.com/2021/12/06/22-annuity-uses-for-2022/

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