An annuity is a contract with an insurance company that turns a lump sum into guaranteed income — either now or starting later in retirement. They can be the right answer for retirees who want a paycheck they can't outlive. They can also be wildly mis-sold. We will tell you which kind, if any, actually fits your situation, in plain English.
You hand over a lump sum; the carrier sends you a monthly check, starting now, for the rest of your life (or a chosen period). Simple, transparent, low-fee. The clearest "guaranteed paycheck" option. Right for retirees who want to convert savings into reliable income.
You hand over a lump sum at, say, age 65, and the income stream starts at age 80 or 85. Cheaper than a SPIA because you're insuring against living a long time, not against living at all. Right for retirees who can self-fund the first 15 years of retirement and want protection against outliving their savings — often a sensible companion to a long-term care plan for the same later years.
The annuity equivalent of a CD. You give the carrier a lump sum; they pay a guaranteed rate for a fixed term (3, 5, 7, 10 years), then you decide whether to roll over, take income, or cash out. Tax-deferred, often with rates competitive with treasuries. Simple, useful for the conservative portion of a retirement portfolio.
Variable annuities, indexed annuities, and many "income rider" products are more complex, often higher-fee, and frequently sold with sales-incentive dynamics that don't favor the buyer. We're cautious about recommending them. There are situations where a properly-structured indexed annuity makes sense, but they're narrower than the steakhouse seminars suggest. If you want the longer version, we walk through the trade-offs in annuities, demystified.
Some annuity products — particularly variable annuities — require securities licensing in addition to insurance licensing. Our scope at Shoreline & Sound is fixed and immediate annuities. For variable products, we'll refer you to a licensed advisor we know and trust on the shoreline.
Got a portfolio and looking at retirement income? Let's talk.
Free 30-min consultation →One conversation. We'll tell you whether an annuity fits, which type, and how it should sit alongside your other retirement income. We will tell you when it doesn't fit too.
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