If you’re in the process of setting up a retirement income plan, it is possible that your financial advisor has brought annuities into the conversation. But even though annuities can offer a long list of benefits – including tax-deferred growth and income certainty – depending on your age, the offering insurance carrier, and the annuity you would like, it could be too late to purchase the annuity.
So, what can you do to better ensure that you’ll have the income stability that you need and want in retirement?
Knowing the annuity purchase criteria that is in place at insurance carriers can be a good place to start.
Who May Qualify to Purchase an Annuity?
While not all insurance companies that offer annuities are exactly the same, these organizations do typically have a list of criteria – or suitability guidelines – that must be met in order for someone to qualify for an annuity purchase.
These factors are oftentimes based on the National Association of Insurance Commissioners, or NAIC Suitability in Annuity Transactions Model Regulation, and they were put in place to protect insurance and annuity buyers. This criteria will typically include the following:
- Your current financial status (including your existing assets and life insurance policies)
- Liquidity needs
- Net worth
- Tax filing status
- Investment / retirement income objectives
- Experience with investments
- Intended use of the annuity
- Age (at the time of annuity application)
There are currently no federal laws that set either a maximum or a minimum age for purchasing an annuity, but the insurance carriers that sell these financial vehicles usually set their own age-related limits.
For example, in some cases, an insurer will not allow an individual who is under the age of 18 to buy an annuity. Likewise, on the upper age limit, it is oftentimes somewhere between 75 and 95 years old.
Because these age factors can differ – sometimes substantially – from one insurance company to another, it is recommended that you work with an annuity specialist who can help you to find the right one for you, based on your age, as well as on your specific goals and needs.
Do You Have a Reliable Retirement Income Plan in Place? It May Not Be Too Late to Do So
Even if you (and/or your spouse) will qualify for Social Security retirement income benefits, it is likely that this source alone won’t be enough. If you plan to supplement Social Security with a portfolio drawdown strategy, this could put you in a position of depleting your assets while they are still needed.
This is where an annuity can come in.
If you’re considering the purchase of an annuity, though, there are many factors to consider before you make a commitment. These include your current age, the date you wish to retire, your risk tolerance, and your short and long-term financial objectives.
With all of that in mind, it can help if you discuss your needs and goals with an annuity or retirement income specialist. At Sooner Retirement, our income planning experts can assist you with determining whether or not an annuity is really right for you – and if so, which one(s) may be the best fit.
So, before you make a long-term commitment to an annuity – one that can be expensive to get out of – make sure that you first set up a time to chat with an Sooner Retirement retirement income professional.
You can reach us directly by calling (918) 938-7734 or by sending us an email with any questions that you have through our secure online contact form. We look forward to helping you create a comfortable and happy retirement.