Six Reasons To Add An Annuity To A Portfolio

Author: Willie Jones

Date: 9/5/2023

View article on Value Walk

Annuities have been around for a very long time. They were an element of matrimonial contracts in ancient Egypt,[1] funded the first public debt in Europe,[2] and even helped Babe Ruth live comfortably during the Great Depression.[3]

Today, annuity sales are at an all-time high[4] as people purchase a range of product types for a variety of reasons, including:

Ensuring Retirees Don’t Outlive Their Savings
Four out of five retirement savers express concern about having enough savings to last through retirement.5 Annuities can provide guaranteed lifetime income, meaning you can receive a paycheck each month in retirement for as long as you live, even if you live longer than average. Think of an annuity as a “personal pension.”

Protecting Accumulated Savings
Annuities can help protect assets, providing partial or complete protection from market downturns. Including an annuity in a portfolio can reduce the chance that market losses will derail your retirement plan.

Delivering Steady Income
Having enough money to pay for basic retirement expenses – without having to rely on market gains – can be incredibly reassuring. It may be why 97% of American say having guaranteed lifetime income in addition to Social Security in retirement is valuable,6 and 73% of retirement savers express interest in purchasing a guaranteed lifetime income product.7

Reducing The Impact Of Big Market Drops
In 2022, stock and bond markets lost value at the same time. As a result, anyone who was planning to retire may have been forced to delay their plans. Certain types of annuities are structured to protect investors from stock markets downturns while giving them opportunities to participate in market gains.

Increasing Retirement Satisfaction
If you’re not comfortable relying on your investment portfolio to provide all the income you’ll need in retirement, then an annuity paying guaranteed lifetime income may be a good choice. Depending on your needs, an annuity can begin paying income immediately or years down the road, and payments continue for the remainder of the owner’s life. This income certainty may explain why retirees with guaranteed income report greater life satisfaction and confidence.8

Positioning Recipients For A Higher Social Security Benefit
Taking Social Security benefits later than normal retirement age can significantly increase the amount received each month. Everyone’s circumstances are different, but many retirement researchers recommend that savers consider waiting to begin taking payments until age 70 to maximize the benefit. Many retirees who decide to postpone Social Security find annuities useful to help them bridge the income gap from the time they stop working to the time they begin collecting Social Security payments.

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Annuities can be valuable retirement and income planning tools. Modern annuities are now available that are lower cost and commission-free, providing improved benefits and greater consumer value.

To learn more about annuity types and compare products, use the free Product Discovery Tools at or contact a DPL consultant at 1-877-625-5544.

About the Author

Willie Jones is a consultant at DPL Financial Partners. Prior to DPL, he spent several years in the insurance and banking industry.

[1] Ikuyo Kato. “Demotic Matrimonial Property Contracts Recorded in the S‘nḫ-documents: A Re-examination of the Term ‘S‘nḫ’”.

[2] David R. Weir. “Tontines, Public Finance, and Revolution in France and England, 1688-1789.” Economic History Association.

[3] Michael Haupert. “The Business of Being the Babe.” Spring 2021 Baseball Research Journal.

[4] LIMRA, “LIMRA: Record breaking annuities sales in the first half of 2023” July 2023

5 ACLI, “Morning Consult Retirement Planning Survey”, May 2023

6 Alliance for Lifetime Income & CANNEX, “ALI Cannex Protected Retirement Income and Planning (PRIP) Consumer Report”, June 2023”

7 ACLI, “Morning Consult Retirement Planning Survey”, May 2023

8 Michel Finke, Ph.D., CFP, Wade Pfau, Ph.D., CFA, “It’s More than Money”, 2019

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