Yes, You Need An Annuity in Retirement

There is plenty of financial advice about Annuities, but the truth, when you apply federal regulations, is the simple fact that, yes, if you are relying on Social Security in any way you need an Annuity in retirement.

For those in retirement federal regulations state:

  1. You must accept Medicare when eligible in order to receive your Social Security benefit.
  2. The bulk of your Medicare premiums are deducted from your Social Security benefit.

Historically, Medicare premiums have been inflating by twice as much as Social Security’s cost of living adjustment (COLA).

Over the last 20 years Medicare premiums and Social Security’s COLA have adjusted as follows:

  Social Security COLA Medicare premiums
5-year avg 1.34% 6.79%
10-year avg 1.52% 3.00%
20-year avg 2.15% 6.20%

Over time Social Security benefits will never increase. To highlight the issue below is an example of a person, age 55, who earns $60k in wages through employment and is projecting to retire at age 67:

Impact of Medicare premiums on Social Security benefits

Impact of Medicare premiums on Social Security benefits

Why an Annuity?

According to Social Security.gov “50% of married couples and 70% of individuals rely on Social Security benefits to be more than 50% of their income in retirement”. The issue: this much needed income from Social Security will not keep up with the rate of inflation over time.

There are plenty of ways to invest in order to generate an income, but which financial product can guarantee that income for the rest of your life?

Yes, you need an Annuity.

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