An Annuity Worth Considering (sic) | Financial Planning Chapel Hill l Old Peak Financial Advisors

An Annuity Worth Considering (sic)

May 20, 2016


An Annuity Worth Considering (sic)

May 20, 2016

No, that’s not a typo. Admittedly, most annuities advisors push are over-priced and unnecessary. But there’s one in particular that many about-to-be retirees should consider: a deferred income annuity, or DIA.

Here’s how it works. (Don’t worry. This is really simple.) You invest a sum of money with an insurance company. They agree to pay you back a pre-determined monthly amount … not now, but when you’re much older. By waiting 10 or 15 years, you are entitled to a much larger check than if you don’t wait. For example, if you buy an annuity at age 65 and wait until age 80 for the income to start, the monthly payment would be 3-4 times higher, according to a popular website,

Why wait, given the risk you may not live long enough to collect?

A DIA makes sense for people who will have enough money if they pass away at an average age, but who may face a shortfall if they live into their 90s or longer. If that’s you, the income boost late in life may make all the difference.

There is a “free” DIA available to all Americans — delaying taking Social Security to 70, to earn a higher payment. It has a similar effect. But if you want suspenders and the belt, consider a deferred income annuity.

This article is not intended to provide tax, legal, accounting, financial, or professional advice. Readers should seek advice from qualified professionals who can review their specific circumstances. Old Peak Finance endeavors to provide information that is accurate and current. However, we cannot guarantee that this information has not been outdated or otherwise rendered incorrect by new research, legislation, or other changes. Old Peak Finance has no liability or responsibility to any individual or entity with respect to losses or damages caused or alleged to be caused, directly or indirectly, by the information contained on this website.

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