Getting Started

Start with the Basics

Annuities can be complex, and it is easy to get bogged-down in product details that are difficult to understand. 

While product details are important, it makes sense to start at a more general financial planning level and then progress towards product details and a potential purchase.  An annuity purchase decision should be deliberate and drawn-out over many years if need be—there is absolutely no need to rush into what is a very important financial decision.


Key Questions

The following is a list of the basic questions that need to be answered—roughly in the order that they appear—before making an annuity purchase:

  • Whether to buy: the reality is that annuities are not for everyone.
  • Why to buy: what are my financial needs and how might an annuity fit into the picture.
  • When to buy: the timing of a purchase can be critical.
  • How much to buy: what amount of my financial assets should be dedicated to an annuity.
  • Who to buy from: the companies and people who manufacture, market and sell annuities.
  • What type to buy: the product types, product features, etc.

The key to answering these five questions is having a handle on what your retirement income and spending needs are, and the way to define these needs is through a good financial plan. 

Take Away 1: When starting to consider and research annuities, worry less about product details and much more about developing a good financial plan and finding a good financial advisor.

Take Away 2: It is virtually impossible to make an informed annuity purchase without having a solid financial plan.