We typically recommend people shy away from investments promising any type of "guarantee." However, income annuities (sometimes referred to as "immediate annuities" or "deferred income annuities," depending on when income payments begin) do offer a predictable guaranteed stream of income that you can't outlive. As with any investment, though, there are trade-offs.
With an income annuity, you give the insurance company a lump sum in exchange for a guaranteed stream of income. Once the money is given to the insurance company, you generally no longer have access to it. Therefore, income annuities are usually best suited for investors who want to maximize their income.
5 key features to consider with an income annuity:
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An income annuity may be the right choice for you if you have a need for guaranteed lifetime income; you know your retirement expenses won't be covered by other income sources, such as Social Security; and you have assets outside of the annuity to cover unexpected expenses. Talk to your financial advisor to determine if an income annuity may help you meet your retirement income needs.
Guarantees are subject to the claims-paying ability of the issuing company.
Edward Jones, its employees and financial advisors are not estate planners and cannot provide tax or legal advice. You should consult your estate-planning attorney or qualified tax advisor regarding your situation.
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