One financial tool your retirement toolbox might be missing is annuities. When it comes to designing a retirement plan that works for your situation, it’s important to know what an annuity is and how it can work for you.

Before we get into the technical stuff, let’s just say what an annuity might do for you. An annuity can provide a source of regular income in retirement. In addition, an annuity might be a way for you to address certain worries about retirement by helping to ease the financial cost of some of those concerning factors.^[1]

For example: if you’re worried that you might outlive the money you have saved, you can design an annuity to take that worry into account.[1] This might be big news to you, but there are annuities that can provide you with payments for the rest of your life, regardless of how long you’re going to live.^[1]

Here’s another example: If you are worried about the potential costs of long-term care and how that could affect your finances, there are annuities out there that can help ease those costs in the event you require long-term care.^[1]

One last example that might sound great to you: There are certain types of annuities that can give you increased payouts if you lose your job due to a qualifying event such as injury, sickness, job loss after a certain age, or more! Depending on the design of an annuity, it’s possible to add a provision for unemployment.^[1]

In technical terms, an annuity is an insurance product that is usually characterized by a person making payments to an insurance company (either in a lump-sum or over time) in exchange for regular, expected payments over an agreed-upon period. So basically, you give the insurance company money now in exchange for money paid later in a certain structure. Be aware that different annuities may come with different fees. Usually, the more risks you wish to cover, the more fees you may pay in terms of reduced payout, increased up-front lump sum, or in another way.^[1]

There are many kinds of annuities. The beauty of an annuity is that, at best, it can be customized to fit your unique situation. Each of the situations mentioned above has a kind of annuity that might help to cover the financial cost of the risk you’re worried about. For example, a “straight-life” annuity can help give you payments for the rest of your life.^[1] An annuity with a “long-term care rider” can help you cover the costs of long-term care should you need it.^[1] And an “unemployment rider” can help you to cover costs should you lose your job under certain circumstances.^[1]

There is a lot to designing an annuity. They are not for everyone, and they require a lot of familiarity with annuity contracts and their design. That’s why we recommend you consider reaching out to one of our professionals today for a complimentary review of your financial situation. We can help you determine what financial products fit with your retirement dreams, so don’t hesitate to contact us today.