As people around the world continue to live longer, it has become necessary to better prepare for the years of retirement. With this increased lifespan, healthy individuals can expect to live well past age 65. When an individual has ceased working, the need to continue to provide some sort of steady income is important. Making wise investments, such as purchasing annuities, becomes an important part of the long-term plan to create and maintain a successful retirement.

Annuities can be confusing and many would-be investors often confuse annuities with life insurance. An annuity is an investment contract or policy between an individual and a life insurance company. Simply put, an investor purchases life insurance in case they die too early and he/she purchases an annuity in the event that he lives too long. While that may seem silly, the fact remains that many individuals aren’t financially prepared for the years following retirement. Annuities are a financial vehicle that can help. Certain annuities allow you to capitalize on some of the market gains without ever losing money when the market turns south.

Unique needs and varying budgets will be determining factors when deciding which type of annuity could be right for you. If you need income now, you should consider investing in an immediate annuity. In this instance, the investor pays the insurer a lump sum of money in exchange for receiving income for a set period of time or for as long as he/she lives. You’ll usually start receiving payments immediately after transferring funds into this type of annuity.

If you’re looking for a long-term retirement savings vehicle, the deferred annuity should be your financial tool of choice. Deferred annuities build savings on a tax-deferred basis.

You will also need to take into consideration whether you prefer a fixed-rate, indexed or a variable annuity. Those who prefer not to take a risk with their money may choose the fixed rate, which provides a stable and guaranteed rate of return. The variable annuity involves investing your money in the stock or bond market, therefore assuming a higher financial risk in favor of the possibility of a more profitable rate of return. Younger investors who have more time to save often choose this type of annuity. The indexed annuity provides the best of both worlds, with principal guarantees and the upside of the stock market without the downside risk. You can’t lose money.

These products can be purchased through insurance agents, financial planners and banks. However, only life insurance companies issue the policies. If you’re in the market for this type of investment, be sure to make your purchase through someone who is well-versed in the specifics of these investments and will take the time to speak with you so that he/she may recommend the right annuity for your needs.

To review your plan and make sure you never run out of money, call my office today!.

Holly Peterson is the owner of Elite Life Services and former radio show host. She is a professionally licensed insurance producer specializing in retirement planning and safe money solutions. Holly serves all of Southeast Idaho. You can find her online at or call her at 208-252-4345.