Worried Social Security Won't Be Enough? Here's a Strategy to Look At

"Many pre-retirees and current retirees share one concern about their later years: They fear that they are going to run out of money too soon and not have enough to live on. This is not an unfounded fear. Americans are, generally, saving too little for retirement. And while Social Security benefits are going to be there for seniors and should last for life, these benefits only replace around 40% of pre-retirement income,"

"When you buy an annuity, you purchase it from an insurance company, and you pay for it in either a lump sum or by making payments over time. Your annuity is able to grow on a tax-deferred basis, which is a nice boost to your savings from Uncle Sam. Your annuity continues to grow without you owing taxes on the gains until you begin making withdrawals from it."

Many pre-retirees and current retirees fear running out of money during retirement because Americans generally save too little. Social Security typically replaces about 40% of pre-retirement income, which often falls short of maintaining prior living standards, especially as healthcare costs rise with age. One approach to supplement Social Security is purchasing an annuity from an insurance company, paid by lump sum or installments. Annuities grow on a tax-deferred basis until withdrawals begin and can pay a lump sum or a steady income stream. Many annuities offer lifetime income, creating a predictable, reliable complement to Social Security.

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