In his latest “How Not To Ruin Your Life” article, Ben Stein warns that eventually there will be a market correction that is based on fundamentals and not on emotion, like the latest little market dip, and that those close to retirement should consider variable annuities as a hedge against this. The younger and middle aged investor shouldn’t worry, and I agree, because we have the one asset capable of weathering the storm – time. For the near retiree or retiree, a variable annuity puts the risk of a stock market fall on the shoulders of the insurer that sells the annuities and off yours.
A variable annuity is an investment that guarantees a specific withdrawal each and every month for life and the insurer generally invests but it comes at a cost, warns Stein. The benefit of the annuity, besides the financial, lies in the fact that it also gives you peace of mind. Having part of your retirement assets in a variable annuity can guarantee a minimum amount each and every month and can act as a nice starting point for the rest of your assets to add to, plus in a market correction you are still guaranteed that minimum amount despite the performance of your portfolio.
To read more about what Ben Stein’s talking about, check out his latest article titled Anticipating All the Retirement Variables.