Insurance products help when things go bad

If 2020 taught us anything, it’s that we just need something to have our backs when things fall apart: An emergency fund when income dries up or medical insurance when the unthinkable happens. When uncertainty is rife, insurance products can cushion the fall.

In terms of retirement products, guaranteed annuities can provide much-needed assurance. As an insurance-type product, a guaranteed annuity insures against the risk of outliving your retirement savings and poor investment returns when the markets go south. You are assured of an income for the rest of your life.

Guaranteed annuities provide security – at a cost. The more security you need, the less monthly income you’ll receive. Let’s look at some factors that will negatively impact your monthly annuity income:

Age: Younger retirees will receive a lower monthly income as they’re likely to live longer than someone who retires at 70.

Gender: The gender pay gap will haunt us into retirement. Women have a higher life expectancy than men, and for this reason, will also receive a lower monthly pension.

Additional securities: A spousal benefit linked to a guaranteed annuity will ensure that your spouse will continue to receive an income when you pass away, as these annuities cease to exist when the policyholder dies.

It’s important to keep in mind when purchasing a guaranteed annuity, you are placing a sizeable chunk of your eggs into one basket – for at least 20 to 30 years.