Most financial advisers aren’t big fans of annuities. They don’t offer the prospect of outsized gains, can’t be easily withdrawn from, and often include loads of fees and traps. But now droves of investors, rattled by the stock market’s crash, have turned to the insurance-like vehicles, the Wall Street Journal reports. Sales of plain ‘ol immediate annuities have hit an all-time high. Here’s what you should know if you want to follow suit:
- Immediate annuities: These traditional vehicles provide more income than standard 4% nest-egg withdrawals, but won’t leave anything for your kids. Try investing just enough in them to supplement those 4% withdrawals.
- Longevity rider: These give big payments for less principle, but don’t start until age 80 or 85. Buy one as soon as you retire, then bump your savings withdrawals to 5-6% in the interim.
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