Why Annuity Should Be a Part of Your Long-Term Financial Goals

Financial planning is a savvy move because it sets you up for a stress-free life. According to a recent study, it isn’t a top priority for Americans, with only about one-third of the population having a financial plan. The calculations may seem like an unnecessary hassle, but they can help you make savings, pay off debts, and achieve your money goals. 

Another survey shows a more detailed view of financial planning in the country. While it reveals that 74% of people plan their money, only 15% have a written plan. Additionally, 30% lack long-term financial goals. The picture is grim from a financial literacy perspective. Without clear goals and a written plan, you may end up making wrong choices.

Working on a long-term money plan is the best way to secure your future with the right savings and investments. If you dig deep and look for the best investment and savings options, you will surely want to explore annuities. 

An annuity is a financial instrument from an insurance company that guarantees monthly income payments during the contract period, regardless of market conditions. While the deal looks good, it is even better as a part of a long-term plan. 

Let us explain why savvy people integrate annuities into their long-term financial goals.

Secures Your Retirement

Annuity as a financial instrument offers more than steady income, no matter how long the owner lives. It secures your retirement years with guaranteed payments even when you are no longer a part of the workforce. Additionally, annuities create a legacy for your family, provided you choose the right plan and collaborate with a reliable insurer. 

According to Annuity Straight Talk, creating a legacy boils down to portfolio diversification. It requires an optimal mix of annuity and life insurance to get the best of both worlds. A diverse portfolio sets you up for regular income and long-term assets to leave as a legacy. 

It is also crucial to debunk the misconception that an annuity leaves nothing at the end of life. Once again, creating a balanced portfolio does the trick. It’s a game-changer, considering that 6 out of 10 Americans plan to leave an inheritance to their loved ones. 

Offers Customizable Features

Another good reason to include annuity in your long-term financial goals is that you can customize the contract according to your needs. You can choose a plan based on several factors, such as the age you expect to live up to, the time you want your payments to start, and whether you plan to leave the income stream to a beneficiary. 

For example, a guaranteed minimum income benefit rider ensures a specific payout for a comfortable post-retirement lifestyle, regardless of the performance of the mutual funds in a variable annuity. 

A joint and survivor annuity covers the surviving spouse of the owner with continued income, while a death benefit provision ensures that the heirs receive something after the owner’s death. That’s as good as legacy, right? You can get these features at an additional price, but they are worth every penny.

Tax Savings

According to a 2022 survey, 59.9% of U.S. households paid income tax during the year. As a prospective retiree, paying taxes may be even more painful because they can cut your available savings. Deferred annuities make an ideal addition to a tax-efficient portfolio. With deferred annuities, you are taxed on the growth only when you take out the money later. 

Unlike other investments that require you to pay annual taxes on what you earn, deferred annuities minimize your tax bills over the years. They surely make a wise choice for your long-term financial goals and roadmap. 


With annuities, you get the benefit of flexibility for contributions and withdrawals. You can make unlimited contributions to an annuity plan, no matter how much your income level and what income sources you have.

Additionally, there are no mandatory withdrawals if your annuity is not part of a qualified retirement plan or an IRA. You also get a choice of investment options with variable annuities, including bonds, stocks, and money market instruments.

Flexibility empowers you with better control over your money in the long run. You can access it and reinvest if markets evolve. Since you are never locked in, you can rework your financial plan for the best outcomes. 

The Final Word

An annuity makes an appropriate retirement vehicle if you can forgo the use of the money for many years. Consider it a way to build a flexible income stream for a lifetime. You can also create a legacy with strategic planning. 

While owning an annuity may entail relatively higher fees and expenses than other investment vehicles, the benefits outweigh the costs. Undoubtedly, integrating it into your retirement plan is a smart decision. 

I am Finance Content Writer. I write Personal Finance, banking, investment, and insurance related content for top clients including Kotak Mahindra Bank, Edelweiss, ICICI BANK and IDFC FIRST Bank.