Finke and Pfau on Income Annuity Basics, and What to Know Before You Buy
September 3, 2019 by Contributor
Retirees are worried that they are running out of money, which is one of the reasons annuities continue to grow in popularity among older investors. The right type of annuity can help ease that concern by providing a dependable income stream when retirees are stop receiving a paycheck.
A recent study conducted by Michael Finke and Wade Pfau, researchers with The American College of Financial Services, found that adding an income annuity can boost the chances of a retiree’s portfolio lasting until they reach the age of 95. The Principal-funded study concluded that using annuities as well as investments can enhance the legacy value of assets over the long term.
There are different types of annuities, and they can come with complicated rules, restrictions, riders and fees. An income annuity allows investors put money into an insurance contract that guarantees how and when they’ll get their money back. But that’s where the simplicity ends. And any guarantee on the contract is only as good as the claims-paying ability of the insurance company.