Ep 433: Are Annuities A Good Investment? What They Are And Why Women Should Consider Them

When we think about our financial fears, one tops the list: Running out of money before we run out of time. According to the Center for Retirement Research at Boston College, half of all US households are at risk of not having enough income to maintain their standards of living in retirement.

The bottom line is that Americans have a problem and we know it. The good news is that we have the ability to fix this problem in our own individual lives, with tools we already have access to today. They’re called annuities, and more people are interested in, and buying annuities, than in years past.  

Minji Ro, Chief Strategy Officer at Gainbridge, and Jason Fichtner, Chief Economist at the Bipartisan Policy Center join us to talk about what annuities are, why economists like them, and the advantages of considering them as part of your retirement portfolio.

Chapters:

0:00 Intro

4:04 Defining Annuities: What They Are 

12:06 The Shift in Retirement Income Strategies Over Time

14:01 The Three Major Types of Annuities: Fixed annuities, Fixed Indexed Annuities, and Variable Annuities

21:23 Transitioning Mindset: From Saving and Accumulating To Spending And Securing Protected Income 

24:28 Annuities and Managing Longevity Risks As Women

30:00 Transition to Mailbag Segment

33:23 Retirement For Highly Compensated Employees

41:34 When To Get A Second Opinion From A Financial Planner

Takeaways:

• Annuities can provide a guaranteed stream of income during retirement.
• There are three main types of annuities: fixed, fixed index, and variable.
• Economists like annuities because they offload risk and provide income protection.
• There is a behavioral barrier to annuitization, but changing the framing and understanding the benefits can help overcome it.
• Women, who earn less and live longer, should consider annuities to manage longevity risk.

Have a question for us? Write to us at mailbag@hermoney.com. 

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The HerMoney with Jean Chatzky podcast is sponsored by Edelman Financial Engines. The podcast team and its host are neither employees nor clients of EFE, however, the show does receive fixed compensation and is a paid endorser and therefore has an incentive to endorse EFE and its planners. To learn more about the sponsorship, please visit PlanEFE.com/HerMoney.

Thank you to Gainbridge® for supporting the HerMoney podcast. Gainbridge® created ParityFlex™, a multi-year guaranteed annuity, to offer women security and flexibility at a time when they need it the most—retirement. Learn more about ParityFlex™ here.

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