Your Mother’s Day Week Guide to Understanding Annuities
Mother’s Day often brings a natural moment of reflection—on the people who’ve supported us, the stability we want for our families, and the steps we can take to strengthen our long-term financial plans. As many households revisit financial priorities this time of year, questions about retirement income and future security tend to rise to the surface.
One tool that frequently enters the conversation—especially for those looking to build predictable income in retirement—is the annuity. While often misunderstood, annuities can play a meaningful role in a long-term financial strategy. Below is a simple, straightforward overview to help you understand what they are, how they work, and when they may be worth considering.
What Exactly Is an Annuity?
Many retirees use annuities to supplement Social Security or pension income, helping create more predictable cash flow throughout retirement.
Immediate vs. Deferred Annuities
Start paying income almost right away.
Benefits:
- Quick, reliable payments
Considerations:
- Requires a lump sum
- Payments usually end at death
Begin paying income at a later date—often aligned with retirement timing.
Benefits:
- Time for funds to grow
- Lower upfront cost than immediate annuities
Considerations:
- Longer wait until income begins
- Beneficiary options depend on the contract
Offer a guaranteed interest rate and protection from market swings.
Payments fluctuate with market performance.
Riders and Customization Options
Optional features—called riders—can enhance an annuity by:
- Providing lifetime income guarantees
- Ensuring payments continue to a beneficiary
- Offering enhanced withdrawal flexibility
These features can be helpful but often come with additional cost, so reviewing them carefully is important.
Liquidity Considerations
Annuities are known for being illiquid, meaning:
- Early withdrawals may trigger fees
- Access to large lump sums may be limited
However, the trade-off is predictable income—something many retirees value for long-term financial confidence.
Final Thoughts
Mother’s Day encourages us to think not just about today, but about the future we want for the people we care about. If you’re exploring ways to create steady income, reduce financial uncertainty, or add structure to your retirement plan, annuities may be a tool worth considering.
As always, we’re here to help you assess whether an annuity aligns with your goals and how it may fit into your larger retirement strategy.
Disclosures:
Advisory services are offered through Assurance Wealth Management, a Registered Investment Advisor in the State of Texas. Assurance Wealth Management is not affiliated with or endorsed by the Social Security Administration, Internal Revenue Service, or any other government agency.
Whenever you invest, you are at risk of loss of principal as the market fluctuates. Past performance is not indicative of future results. Purchases are subject to suitability. This requires a review of an investor’s objective, risk tolerance, and time horizons. Investing always involves risk and possible loss of capital.
All written content is for information purposes only. The information contained herein has been derived from sources believed to be reliable, but is not guaranteed as to accuracy or completeness and does not purport to be a complete analysis of the materials discussed. All information and ideas should be discussed in detail with your individual adviser prior to implementation.
