What is an Inflation Protected Annuity?
August 16, 2023 | Kari Mellone
Inflation.. it may be more of a concern than ever before. Because of this you are likely considering all the ways you can save and protect your financial future from the impacts of inflation. With rising costs being a significant concern for all, especially retirees, an inflation-protected annuity can offer a solution to preserve purchasing power over time.
Related Read: Mistakes to Avoid When Buying an Annuity
How Does an Inflation Protected Annuity work?
An annuity is an insurance product that allows you to save for your future on an income tax-deferred basis. You choose a payout option that meets your needs for income when you retire; this can be as a lump sum, income for life, or income for a certain period of time. An inflation-protected annuity or an inflation-indexed annuity is designed to provide individuals with a steady income stream throughout retirement while accounting for and protecting against the impacts of inflation by adjusting the payout amount to keep up with the rising cost of living.
Some benefits of inflation-protected annuities include:
- Protection against inflation
- Reliable income
- Safety from market risks
- Tax Advantages
- Flexibility
An inflation-protected annuity can offer peace of mind by providing a predictable and stable income throughout retirement. This can give you confidence in knowing that annuity payments will keep up with inflation, allowing you to plan your finances more effectively and securely.
Although inflation-protected annuities have some great benefits, they may have disadvantages, such as higher initial costs than traditional annuities. Also, the inflation adjustments may be subject to limitations. Because of this, it is critical to carefully review the annuity contract terms and ensure you understand the fine print.
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Selecting the appropriate annuity is crucial as it will financially influence your retirement. This is why it is essential to carefully explore all available choices and opt for an annuity that aligns with your specific needs and goals.
At Twin City Underwriters, we know that individualized attention to a client’s personal situation and needs are especially important, which is why we take the time to understand you and your financial goals. Contact us to schedule an appointment with one of our experienced insurance agents.
Are you ready to have a meaningful discussion about your financial needs? Call or email TCU today to set up a free, no-obligation appointment with one of our dedicated agents.
Call Twin City Underwriters to learn more: 651-488-0172 or 800-507-6778.
