Thinking about Annuities

I've never been interested in annuities before.  I've always believed that investing in the stock market was a better option.   Lately, I've been thinking that annuities do have a place in our wealth building plans: longevity insurance.  This would address the risk of outliving our assets should we have longer than average life expectancies.

My plan is to sell our house when our daughter graduates from college, in about 15 years when I'm 70ish .  If we're lucky, home prices will appreciate about 5% per year giving us double the current market value.   The proceeds from the sale of our home can be invested in a second to die annuity that provides income for the rest of our lives.   That way, we will have some guaranteed income for life.

Lately,  I've been exposed to more information on annuities.  Last month, a local financial planning group invited me to a seminar which included a discussion on annuities.  This week's cover story in Barron's is the "
Top Fifty Annuities."  One thing I've learned is today's low interest environment makes it the least favorable time to initiate an annuity.  A better time is when interest rates are high(er).  That way the monthly payout will be higher for the same investment.

Fortunately, we have at least 15 years before we will start an annuity.

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This is not financial advice. Please consult a professional advisor.

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