Real Answers for Life’s Money Challenges
like help me evaluate a tantalizing temptation.
I am a 58-year-old single gay white male college graduate with no dependents.
I worked hard, prospered, lived frugally and saved for over 30 years.
These are thebiggest money secrets rich people don’t tell you.
In my early 50s, I was promoted beyond my skills and abilities and consequently floundered professionally.
Currently, I am self-employed owning/managing a vacation rental and three single-family residential rentals all debt-free.
These rentals gross/net approximately $6,000/$4,000 monthly, respectively.
Additionally, five RV site rentals net between $1,200 and $3,000 monthly depending on occupancy.
Heres where Id like advice, hey.
Oh, the temptation!
Much of the bad rap is deserved, but I do think theyre appropriate in some circumstances.
Im just not sure its the best option for your particular circumstances.
Anannuityis technically an insurance contract, not an investment though some annuities do have underlying investments.
Annuities protect you against the risk of outliving your money by providing guaranteed income, often for life.
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So whats the case against annuities?
For starters, theyre often ridiculously complex, with loads of less-than-transparent fees.
Theyre also relatively illiquid.
Probably not as good as youd like.
It always seems like an uphill battle to build (and keep) a decent amount in savings.
But what if your car breaks down, or you have a sudden medical bill?
Ask one of these companies to help…
Inflation is another consideration.
If you opt for an annuity with fixed payments, your money will buy less each year.
you’ve got the option to purchase inflation protection for an annuity.
My question for you is: When did an annuity become such a tantalizing temptation?
Have you been dreaming of cashing in your real estate holdings for guaranteed income for a while?
Or have recent events led you to ponder an annuity?
Annuities spike in popularity when people worry about abear market.
The second quarter of 2022 saw record annuity sales, according to theLife Insurance Marketing and Resource Association.
It was set in the fourth quarter of 2008, in the midst of the Great Recession.
If a prolonged recession would jeopardize your retirement, an annuity would merit serious consideration.
But clearly, you dont have to worry about running out of money.
Moreover, the fact that youre an entrepreneur suggests that youre not completely risk-averse.
So ensure youre not making decisions about your seven-figure nest egg based on short-term market fears.
But the great thing here is that you dont need free advice.
Look for a fee-based financial planner.
Theyll get paid for the services they provide instead of a sales commission.
This also doesnt need to be an all-or-nothing decision.
You could estimate your basic retirement expenses and buy an annuity that will cover those needs.
Annuity or not, youre going to get the responsibility-free and work-free retirement you crave.
Just be sure you explore the alternatives that may prove even more tantalizing.
Robin Hartill is a certified financial planner and a senior writer at The Penny Hoarder.
Send your tricky money questions to[email protected].
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