Yes, you can set up your own annuity—but first consider what that would take
I’m approaching retirement, and the turmoil in the markets this year has me thinking, for the first time, about buying an annuity. I like the idea of predictable income, but I don’t like the idea of handing my money, permanently, to an insurance company. What do you think about a person building his or her own annuity? Is there a good way to do this?
Yes, there are ways to create an annuity. And I think it’s wise to consider how an annuity might help you and your nest egg. But I think the do-it-yourself approach can be difficult for many investors and carries some sizable risks. To start, I’ll focus on the product you seem to be considering: an immediate fixed annuity. In other words, you hand a lump sum to an insurer, which, in turn, guarantees you a monthly paycheck for life. Period.
If you wish to build something resembling an immediate fixed annuity, you could, for instance, assemble a “TIPS ladder,” a collection of Treasury inflation-protected securities of various maturities. Or you could construct a bond portfolio with high-quality corporate and municipal bonds. Both approaches would produce a predictable stream of income.
Even something as simple as a “balanced” mutual fund, one with a mix of stocks and bonds and a long history of solid returns, could, in theory, serve as an annuity. A good example: has posted an average annual total return of 9.46% since its start in 1939.
United States Latest News, United States Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
Meal Kits: Pros and Cons From a NutritionistIf you think cooking is a hassle, the promise of meal delivery kits can be incredibly appealing – but do the pros outweigh the cons?
Read more »
Pros Say Grown-Out Roots Is a Huge Hair-Color Trend for SpringGood news for everyone who can't go to a salon right now.
Read more »
These Are The Roller Skates Pros Swear By For Every Budget And Style'Antik AR2 skates are a popular choice for serious skaters both for skateparks and roller derby skating. Higher grade aluminum plates will transfer energy and changes in direction efficiently and the boots are both comfortable and tough enough to handle the rigors of demanding game play and high flying park tricks.' \u2014Kathleen Janzen, a.k.a. Roxy Acetylene, owner of Nerd Roller Skates shop and co-owner of Calgary Roller Skate School
Read more »
'We are outnumbered' — cybersecurity pros face a huge staffing shortage as attacks surge during the pandemicThe Information Systems Security Association found a 63% increase in cyberattacks related to the pandemic, calling Covid a 'once-in-a-lifetime opportunity for hackers and online scammers.'
Read more »
Here's how credit card fraud happens and tips to protect yourselfWhile there's no way to prevent credit card fraud, you can familiarize yourself with common methods of fraud and how you can protect yourself.
Read more »