Because if you are nearing retirement and are looking for a vehicle that could give you the opportunity to receive steady income, immediate annuities ought to be considered. If you are looking to turn some of your investment portfolio from accumulation to distribution, annuities might be used as a vehicle to deliver to your bank money each and every month for the rest of your and your spouses life if you desire.
Each of us has fixed monthly expenses which will continue whether we are working or not, so why not use part of a portfolio to cover those fixed expenses with an annuity and continue to allow yourself to be more aggressive with the rest of your portfolio since your fixed costs would be covered? It is not the silver bullet, but it is a tool that should be considered if you want the ease of use, are looking to diversify your portfolio or if you don’t have someone managing your wealth who can advise you on how to receive regular income from your current accounts.
Some say interest rates are so low, it is not a good time to buy annuities, but even with the low interest rates, insurance companies are still crediting rates higher than banks and for steady income you might be surprised as to the payouts.
In addition, if you are looking for ways to defer some additional funds for retirement, fixed annuities or variable annuities might be good vehicles for tax-deferred accumulation. This should be considered against any other tax deferred options available.
Annuities are not the right fit for everyone, but they are worthy of discussion.