If you are looking for a safe alternative to the tumbling market you may want to consider the annuity.

The annuity, like all financial products, has advantages and disadvantages. Fortunately, the advantages can be quite impressive. However, proper client suitability can NOT be successfully achieved unless and until we recognize that the AGE of our client can have a direct impact on our recommendations. Below, we identify the advantages annuities offer for consumers.

1. Time
Without a doubt, the more time you have before retirement, the more time you have to take advantage of tax deferral. The difference between a 40 year old and a 45 year old starting an annuity for retirement could mean a $46,000 difference in accumulation.

2. Flexible Premiums
Understandably, the younger you are, the less apt you are to have already accumulated a lot of money. Therefore, the advantage of a flexible premium is that it can allow one to start saving by making premiums every month or every quarter.

3. Social Security
Repositioning some of the money that our clients have in taxable alternatives to a tax-deferred annuity may reduce or eliminate the income taxes that they are paying on their Social Security benefits.

4. Annuitization
Many retirees are on a fixed income. And, many retirees are living far longer than expected. As a result, outliving your money is a fear that we, as financial professionals, must address. Fortunately, the annuity is the ONLY financial product that can guarantee monthly income for as long as they live (and even their surviving spouse). Simply put, an annuity owner can either purchase an immediate annuity with a single premium or they can apply the values built up in their tax-deferred annuity and annuitize their annuity to receive income that they cannot outlive.

5. Tax-Deferred Accumulation
Under current tax law, earnings credited to annuities accumulate tax deferred until withdrawn. This can be an advantage for those consumers who do not need income yet. As you are aware, earnings credited to taxable alternatives are taxable even if not withdrawn.

6. Partial Access to Money in Early Years
In many tax-deferred annuity contracts (both fixed and variable), owners may withdraw a percentage of their dollars free of surrender charges. With many annuity contracts, this percentage is often 10% of the accumulation value. This provision can vary from one annuity contract to another. Withdrawals are often taxable and may be subject to a 10% tax penalty as well. Naturally, the advantage of surrender charge penalty free partial access surfaces if the owner needs money unexpectedly.

7. Money in Later Years
In some annuity contracts, the surrender charges disappear to 0% after x years. In other annuity contracts, surrender charges disappear after x years but can reappear if the owner chooses to renew for another term of x years. In both types of annuities, the annuity owner may surrender or exchange their annuity without any surrender charges assuming they surrender when there are no surrender charges. Naturally, surrender would be a taxable event but could be carefully timed when in a lower tax bracket and a 1035(a) exchange could be tax-free and could come in handy when exchanging the old annuity for an appreciably superior annuity.

8. Potentially More Money
As discussed earlier, annuity owners could have more money later since earnings accumulate 3 different ways: earnings compound on top of principal, earnings compound of top of earnings, and earnings can compound on top of the dollars that normally go to the government in income taxes.

9. Less Current Income Taxes Now
Taxes are only paid when earnings are withdrawn from the annuity in comparison to interest earned on taxable alternatives when taxes are paid regardless to whether you leave the interest in or take the interest out. Naturally, these dollars that you would normally pay in taxes now remain in the annuity to help accumulate more money. However, there is an extra advantage. Reducing the amount of taxable interest may help reduce or eliminate the income taxes that some elders pay on Social Security income. When this occurs, the benefit is more spendable income since the elder will pay less in income taxes than the previous year (assuming all other things equal).

10. Choice to Annuitize and Receive Guaranteed Income
The annuity is the ONLY financial product that can guarantee a periodic income for as long as one lives, even for as long as their surviving spouse lives. While the advantages to receiving guaranteed income, the “annuitization” choices, and the tax advantages were explained, the statistical data convincingly shows how many people are living longer. As a result, annuity owners who do annuitize can be assured of a guaranteed income for as long as they live, an advantage ONLY available to people who own annuities.

11. Guaranteed Lifetime Interest Rate
Just as the annuity is the ONLY financial product that can guarantee income for life, the fixed annuity is the ONLY financial product that can guarantee an interest rate for the life of the policy. Choice of One Year or Multi-year Guaranteed Interest Rates or Earnings Linked to an Index A popular product could be defined as one that gives people choices. If so, then an annuity could be considered popular since there are some annuities that allow you to select from a variety of interest rates guaranteed for one, three, five, seven and ten years. Or, you can elect for your earnings to be linked to an index. And, the choice of indices allows one to double or triple diversify some of their dollars among a variety of indices.

12. Probate Advantages
Clearly, one of the most overlooked benefits of owning an annuity is that dollars paid to a named beneficiary can avoid the delay, expense and publicity of probate. This annuity advantage (and life insurance) could potentially mean thousands of extra dollars in savings and potentially less anxiety for the consumer.

13. Great Product to Select for Diversifying More Thoroughly
In the opinion of many, no one should put a great deal of their dollars into any one given concept and or product. People should carefully diversify their dollars among taxable, tax-deferred and tax-free alternatives. As a result, Fixed-Indexed Annuities become an excellent candidate for “some” of their dollars when attempting to help people diversify more thoroughly.

14. Wide Variety of Riders
Fixed annuities can provide both riders and crisis waivers. These riders provide guarantees and flexibility that only can be viewed as advantages when and if the owner fully understands how they work and what they cost.

15. Surrender Charges
While some view surrender charges as a disadvantage, others view surrender charges as a plus since a) the surrender value is known up front and b) they do protect an insurer from a “run on the bank.” »

According to the Employee Benefit Research Institute (EBRI), only 18 percent of workers surveyed were “very confident” about having the ability to afford a comfortable retirement.

This is down from 27 percent, last year. This is the largest one-year drop in the history of EBRI’s survey. Only 43 percent are “somewhat confident” that they’ll have enough money for retirement. And 25 percent believe they’ll need less than $250,000 for retirement. Only 16 percent believe they’ll need between $250,000 and $499,999.

Just something to think about.