Age
Annuities are long-term investment tools for supplementing retirement income. There are no IRS-imposed annual contribution limits, and annuity earnings grow tax-deferred until the funds are withdrawn or paid out as income. Annuities are increasingly popular among Baby Boomers and members of the Mature or "Senior" markets.
Financial Status
By carefully examining the client's standard of living, resources, and family needs, advisers and brokers can realistically decide which investment goals best fits buyers' needs.
Key financial information includes:
- Income: Determine the prospective buyer's current income and expenses. What are his or her future income needs? Can current expenses be reduced? Are other income sources readily available to cover unexpected short-term expenses, now or in the future?
- Liquid Assets: Assess the prospect's ratio of assets to ready cash. Is it adequate? Will that ratio change in the future? If so, how? Typically, seniors should have liquid assets equal to at least six months of living expenses. Will buying an annuity now put too much strain on the person's liquidity?
- Comprehensive Long-Term Care: Has the buyer planned for long-term care protection? Does he or she understand the potential need for LTC among seniors? Should LTC insurance be purchased before buying an annuity? What other sources of care might be available to the person in the event of a long-term care illness?
