One of the biggest challenges retirees face is the need to balance a variety of conflicting financial goals. You need income to fund your retirement, but you also need to grow you assets to pay for future expenses. You want to enjoy your golden years, but you also need to set money aside for future health care costs and long-term care needs. It’s hard to cover current needs and plan for future ones.
Fortunately, you have tools and strategies available that help you balance those goals. One tool to consider is a hybrid annuity. A hybrid annuity is simply an annuity contract that combines elements of two separate types of policies. By mixing features from two different types of annuities, you can use one strategy to plan for distinct, competing goals.
There are several different types of hybrid annuities. They vary by insurance company and have many different features and benefits. Below are a few of the most common types of hybrids:
Fixed and Variable Growth
Fixed annuities allow you to accumulate cash value through annual interest payments. Variable annuities provide growth through investment in the financial markets. While variable annuities usually have some level of risk exposure, fixed annuities are often risk-free.
Some hybrid annuities offer two components: fixed and variable. The fixed bucket offers no risk and predictable returns, while the variable portion may have some market risk, but greater growth potential. You could also choose to annuitize the fixed portion to generate guaranteed income and then use the variable portion to try and grow your assets.
Income and Long-Term Care
Many people use annuities to generate predictable, guaranteed retirement income. However, it’s possible that you may face expenses in retirement that increase your need for income. If you or your spouse need long-term care at some point, you may need more income than your annuity provides.
Some hybrid annuities also offer long-term care protection in addition to guaranteed income. For example, the annuity may allow you to increase your income if you have a terminal illness or need long-term care. Or you may be able to accelerate your annuity payments to pay medical bills.
Income and Death Benefit
While you may want guaranteed income for your retirement, you also may want to leave a legacy for your loved ones. Many hybrid annuities combine guaranteed income benefits with death benefit enhancements. You get a guaranteed stream of income, but also leave a death benefit to your spouse, children, or other beneficiaries.
Ready to talk about a hybrid annuity and how it may benefit your retirement planning? Let’s connect and discuss your needs and goals. Contact us today at America’s Annuity to start the conversation.