Annuities have increasingly become popular as retirement options due to their secure income guarantee and can help provide an alternative source of reliable, ongoing income in retirement. While stocks and bonds still play an essential part in financial portfolios, annuities provide another predictable source of lifetime income that may fill in any gaps left by other investments.
Reducing interest rates has caused these annuities to become less attractive; fixed annuity rates have seen significant gains since 2022 according to Limra’s research firm on annuities sales of nearly $140 billion worth of contracts last year with rates tripling in 18 months; yet as rates return down these annuities could see their value diminish significantly.
At present, retirees can make the most of favorable market conditions by conducting thorough annuity research. Beyond simply comparing annuity rates, retirees should examine factors like lifetime income payments, escalation costs and rider benefits before making their decisions. Navigating the annuity world may seem complex at first, so having adequate resources and support to make an informed decision is vital for making an educated choice.
Legal & General and Morgan Stanley have introduced annuity ready, a free real-time annuity comparison service designed to assist customers in selecting an annuity suitable to their circumstances. Customers can use annuity ready to compare different providers and products based on individual circumstances – this may even allow for enhanced rates that result in greater incomes for themselves.
As its name implies, this service aims to help individuals get annuities “ready.” That includes learning the fundamentals as well as their various features and benefits of annuities as well as providing step-by-step instructions on transferring a pension pot into an annuity and giving an overview of available lifetime annuity products.
As part of your annuity preparation, the first step should be identifying how much income will be needed during retirement, using an annuity calculator for assistance. Once you know this amount, shopping around for an annuity provider with competitive rates – something similar to shopping for cars or appliances – should follow.
Alternatively, if you need assistance getting started, don’t hesitate to consult with a financial advisor for guidance. They will help identify suitable annuity products for you situation as well as offer quotes so that you can compare rates and select one provider who best meets your needs.