Retiring In 2020? 3 Annuity Strategies To Weather A Recession

Anyone considering retirement during 2020 and 2021 faces an uncertain financial situation in the near future. But one way to help make retirement work even during the expected deep recession is to use annuities to create a stable nest egg. How can you use an annuity strategy to provide income and protect your money? Here are three ways to do it.

1. Immediate Annuity

An immediate annuity is a contract in which you deposit a lump sum of money with an annuity provider who then pays the owner in the form of monthly checks.

An immediate annuity gives you a steady 'paycheck' of sorts with a guaranteed amount. In a short-term recession, you won't have to worry about making the bills. And because you lock in a monthly rate, you don't have to worry about your retirement account losing money in a down stock market.

2. Deferred Annuity

If you are in a good financial position now but want to ensure things stay that way, you might opt for a deferred annuity. This method allows you to deposit either a lump sum or to make payments into the fund. Then, you would begin drawing that monthly payment at a later date.

A deferred annuity gives you the ability to continue to invest during the recession and take advantage of winning sectors. If your investment plans don't make the returns that the annuity company makes, you can change to a lump sum. 

3. Combination of Annuities

You aren't limited to one type of annuity, of course. Rather than putting all your 'eggs in one basket', so to speak, another option is to purchase more than one annuity of a smaller amount. With this plan, you could purchase one immediate annuity to provide stability through the recession and a second annuity to defer until the future. You might even split the payment further to create a sort of 'tiered' retirement plan that accounts for changes in other income. 

While both annuities will be smaller in quantity and in payout, it boosts diversification. You can also invest with more than one annuity provider in order to reduce the risk of anything happening to the contracted company. 

Which of these annuity strategies might be best for your situation? The answer is up to each individual investor, depending on your current financial picture as well as how you expect to weather the recession. Learn more about all your choices by meeting with an experienced financial planner in your area today. 



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