5 Reasons You Should Consider an Annuity For Your Retirement Savings
Written by
Vance Cariaga
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For many Americans, retirement savings begin and end with a 401(k) and/or an IRA.
But an increasing number of Americans are also diversifying their retirement savings to include another option — annuities. As GOBankingRates previously reported, sales of annuities rose by 22% from 2021 to 2022. And as of the second quarter of 2023, total retirement assets in annuities were around $2.29 trillion1.
So what is an annuity? Annuities are insurance products that pay out a fixed amount of money in a series of payments. Their main function is to remove longevity risk for retirees, meaning they don’t have to worry about outliving their savings.
One great option is the SteadyPace™ annuity offered through Gainbridge®. Gainbridge® is a self-managed digital platform that gives you some of the highest rates around, with a guaranteed annual percentage yield*.
Annuities have a handful of advantages. Here are the main reasons you should consider one for your retirement savings:
1. They Provide Safe, Steady Returns
First, with an annuity like SteadyPace™, your money is in a safe place that provides steady returns over a long period of time. And the money grows through the interest you earn, so it pays to find the best rates.
The savings are tax-deferred, so you don’t pay any income taxes on the annuity until you start to withdraw funds. One thing to keep in mind about annuities is that they are typically divided into two phases:
- Accumulation phase: Sometimes called the investment phase, this is the period during which contributions are made to the account and funds grow. Appreciation during this time is based on contractual guarantees or investment performance, depending on the type of annuity purchased.
- Annuitization phase: The second phase is the annuitization or payout phase. This is when you start receiving payments. These payments can be a lump sum, periodic payments or some combination of the two. The amount paid out is determined by the amount contributed, the performance of the account, your expected lifespan and the type of distribution you selected.
Because annuities offer a guaranteed rate of return, they can be appropriate for more risk-averse consumers by letting you avoid the risk and volatility associated with stocks, funds, real estate and other investments. With a SteadyPace™ annuity, you are guaranteed a return of APY* without having to worry about the peaks and valleys.
2. They Can Offer Better Returns Than Other Investments
Investing in an annuity can provide a larger return than other types of financial products — as long as it’s the right annuity. For example, SteadyPace™ APY* is higher than what you will find with most longer-term certificates of deposit and Treasury bonds.
For example, the average rate for a 60-month CD was only 1.40% as of February 20, 2024, according to the FDIC**. The average rate for shorter-term CDs ranged from 0.23% for a one-month CD to 1.83% for a 12-month CD***.
Long-term Treasuries with maturities of 15 years or longer offer rates of around 4.5% for fiscal year 2024, according to TreasuryDirect****.
3. You Diversify Your Portfolio
Adding annuities to your retirement strategy is a good way to diversify your portfolio, so it has the right mix of assets. You want to keep a balance of savings accounts, annuities, stocks, bonds, mutual funds and other investments to protect against slumps in any one asset class.
4. Your Income Can Last a Lifetime
There are different types of annuities, and some come with a guaranteed payout for the rest of your life. Another benefit is that you don’t have to stress as much about unexpected expenses, because you know you’ll have the annuity income in addition to income you get from Social Security or withdrawals from other retirement savings accounts.
5. Tax Advantages
When you sign up for annuities like the one offered by SteadyPace™, you get tax-deferred growth, meaning the earnings on your investment are not taxed until withdrawals are made. This lets your investments grow faster and also optimizes your tax strategy in retirement.
Bottom Line
Investing in a SteadyPace™ annuity not only guarantees a higher rate of return — it also helps you avoid the risk and volatility associated with the stock market. With a SteadyPace™ annuity, you don’t have to worry about the peaks and valleys.
Signing up is simple and can be done in less than 10 minutes, and you can start boosting your retirement income with a guaranteed APY.*
This is a paid advertisement. SteadyPace™ is issued by Gainbridge Life Insurance Company in Zionsville, IN. on contract form number ICC22-D-MYGA-BASE, or variations of such. Products and/or features may not be available in all states. Guarantees are based on the claim-paying ability and financial strength of the issuing insurance company. Annuities are long-term investment vehicles and have charges, termination provisions, and terms for keeping them in force.
*Rates subject to change at any time, and the rate mentioned is for a 3 year term and may no longer be current. Please visit gainbridge.io for current rates, full product disclosures and disclaimer, and other important information.
** FDIC national average rates
*** CD Rates
**** Treasury Direct
This communication is for informational purposes only. It is not intended to provide, and should not be interpreted as individualized investment, legal, or tax advice. To obtain such advice, please consult with your investment, legal, or tax professional.
NOT FDIC/NCUA INSURED | MAY LOSE VALUE | NO BANK/CREDIT UNION GUARANTEE |
NOT A DEPOSIT | NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY
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