Will Rogers once said, “I am not concerned with the return on my money, I just want to get my money back.”  Today that isn’t so easy.  If you have a few years until retirement, you will probably see your investments increase again.  However, if you are in retirement without a sizeable and guaranteed nest egg, it must be very frightening!

If you watch TV, read the papers, magazines or listen to the radio, you know our financial world is unpredictable at best.  Every pundit, investment show and blog gathers its proponents and prognosticators.  So what do you do during these hard financial times when most of our investment portfolios have lost 30 to 50% or more of their value?   Many conservative investors have discovered the benefit of Annuities.

An article by Scott Petersen, “Mutual Funds Adapt to Terrible Times” NEWSMAX , (April 2009), Mr. Petersen writes that “changes in mutual funds could have a big effect on where—and how—their money is being invested. The tremendous loss of assets in the equity markets during the past year is forcing mutual fund companies to become more creative.  New mutual fund investment strategies are being formulated, new kinds of funds are emerging and others are being closed or merged in order to survive.”  He writes further, “Many funds will simply become more conservative, creating a return similar to an annuity.” 

An annuity is a contract in which an insurance company makes a series of payments to you at regular intervals in return for a premium.  Annuities are often bought for future retirement income.  The proceeds from an annuity can provide you with an income for life, or for a specified period of time.  There are two basic types of annuities.

As an insurance agent, I have marketed and sold annuities for years.  I am always surprised how much my clients that have purchased annuities love them—and I mean love them! One of my insured’s put them in a Pension and Profit Sharing Plan for their employees in the 90’s.  During this time period, the market had its ups and downs but the employer found the guaranted interest rate an advantage over mutual funds with no guarantees. Some that have purchased annuities have split their contributions—one for an immediate annuity and the remainder in a deferred annuity to build back an accumulation for use at a later date.  This has worked especially well for safe diversification.  And finally, one of clients who has taken an income every month, hasn’t watched in fear since her principal and interest was guaranteed.