Over the last several years the financial market has rebounded, jobs are starting to come back, and overall the U.S. is much more financially secure than in the years directly following the “Great Recession.” Nevertheless, people are showing apprehension when it comes to how and where they choose to invest their savings.
Even with current interest rates low, there is a trend upward in the purchase of annuities. According to the news outlet AZCentral.com, sales of annuities rose 3% in 2014. These type of annuity policies are especially popular with Baby Boomers as more and more rapidly approach retirement age.
As the piece also points out, it is the conservative, fixed-rate annuities that are enjoying the most success, as opposed to volatile versions that rely more on stocks. These safer options, however, only usually yield payments of just 2-3%. When you consider it’s not uncommon for annual annuity fees to reach levels of 3%, it might be time to ask yourself if playing it so close to the chest is really worth it.
While it’s certainly smart to be conservative and risk-averse with the majority of your retirement savings, at some point you need to determine what the net gain will be. You might as well keep your money stashed away in a box under your bed, instead of paying fees that drain your capital, leaving you the same amount you started with.
In other words, it might be time to start looking into slightly more aggressive investment options. If you already spent your retirement investment money on the purchase of an aforementioned annuity, it’s still not too late. There are many reputable companies in the business of buying annuities for cash settlements.
If you go this route, you will then have money on hand to invest in slightly riskier, but potentially more rewarding options. According to a piece in the Chicago Tribune, one-third of Americans think there’s better than a 50% chance they will outlive their savings. Not losing money is great, but not making the money you have work for you isn’t helping you either.
As has been the case throughout history whether in business, love, finances, or life: You gotta risk it to get the biscuit.