When building the foundation for your retirement income strategy, it's important to consider ways to ensure your money lasts as long as you need it. Certain annuities can provide guaranteed payments for life, which may be a strategy to consider to provide "income insurance." Discussing the following questions with your financial advisor can be a good starting place to determine if an annuity is right for you.
1. How much of your necessary expenses are covered by outside income sources, such as Social Security and/or a pension? Most – Little
If you have enough income from Social Security and/or a pension to cover your necessary expenses, you may not need an annuity.
2. How would you rate your ability to reduce spending and expenses in case of unexpected events?. Higher – Lower
If you can cut back your spending when the market isn’t performing well or have cash reserves to cover unexpected expenses, you may not need an annuity.
3. What is your comfort with risk? (You can work with your financial advisor to complete a more detailed Risk Tolerance Questionnaire.) Higher – Lower
The lower your tolerance for market fluctuations, the more you might want to consider income insurance.
4. Given your current health and family history, how long do you expect to live relative to the average life expectancy of early- to mid-80s? Shorter – Longer
If you live longer than you expect, you could outlive your money. Lifetime payments from an annuity can help guard against this.
5. Which of the following is more important to you? Leaving a legacy – Retirement Income
6. Which of the following is more important to you?
Greater control over assets – Higher lifetime income
One of the trade-offs of lifetime income from an annuity is potentially reduced flexibility, including lack of investment control and access.
The closer your answers are to the second option, the more appropriate annuities with lifetime income may be, while the closer your answers are to the first option, the less appropriate they may be for your situation. However, before making any decision, be sure to discuss these questions with your financial advisor.
All contract guarantees are subject to the claims-paying ability of the issuing company.
Variable annuities are sold by prospectus. You should consider the investment objectives, risks, charges and expenses carefully before investing. The prospectus will provide you with this information, as well as additional information from the insurance company or subaccount investment manager. Your Edward Jones financial advisor can provide a prospectus, which should be read carefully before investing.
Edward Jones is a licensed insurance producer in all states and Washington, D.C., through Edward D. Jones & Co., L.P. and in California, New Mexico and Massachusetts through Edward Jones Insurance Agency of California, L.L.C.; Edward Jones Insurance Agency of New Mexico, L.L.C.; and Edward Jones Insurance Agency of Massachusetts, L.L.C.