Annuity Plans Will Never Be the Same I want to ask you a personal question. When was the last time you thought about your retirement? I'm not trying to put you on the spot or embarrass you....

I want to ask you a personal question. When was the last time you thought about your retirement?

I'm not trying to put you on the spot or embarrass you. And, I'm certainly not trying to wig you out. But, in reality, we're experiencing a retirement crisis.

Before you assume that I'm exaggerating here, the Federal Reserve report found that around 38% of people between the ages of 18 to 29 have zilch in retirement savings. And, that's also true for 27% of people between the ages of 30 and 44.

Before ganging up on Gen Z and Millennials, 17% of the 45 to 59 age brackets have nothing set aside for retirement. What about those over 60? Well, 12% of people in this demographic also lack a retirement cushion.

Even if you do have a retirement plan, like a 401(k) from your employer or a self-employed option, such as a Solo 401(k) or SEP IRA, that alone probably isn't going to cut it as far as a livable income. Instead, you're going to need several different vehicles of retirement savings if you want to reach your retirement destination. And, one of the more appealing retirement plans to consider is an annuity.

Let's Talk Annuities

A few years back, TIAA, which describes itself as a unique financial partner, posed an interesting question in its "Lifetime Income Survey." Would you rather receive a lump sum of $500,000 or $2,700/month for life? Sixty-two of respondents went with the monthly income?

But why? I mean, a cool, half-million dollars in cold, hard cash seems like a sweet deal to me.

"A steady stream of income in retirement helps cover your expenses, no matter how long your retirement lasts," said Ron Pressman, chief executive officer of Institutional Financial Services at TIAA. "Lifetime income helps ensure Americans have the financial security they need in their retired years – it's not a "nice-to-have,' it's an absolute necessity."

The survey also showed that an overwhelming percentage of people, 71% to be exact, "support legislation to make it easier for employer-based retirement plans to include lifetime income products, such as annuities, as investment options." And, 67% "favor legislation that requires retirement account statements to include an estimate of monthly income in retirement."

That's all well and good, But what exactly is an annuity?

Fair question. Short answer? They're a contract between you and an insurance company. You give money to said insurance company and they'll invest it for you. In return, you'll be guaranteed a retirement income for the rest of your life.

What's interesting about annuities is that they have been around for thousands of years, going back to Ancient Rome. It wasn't until the early 20th Century when the American public could join in annuity fun.

Annuities sound pretty simple to me. How can I make it a part of my retirement strategy?

Let's cool the jets down real fast. I'm glad you want to jump on board. But, annuities are both simple and complex. They come in various shapes and sizes. And, depending on which type of annuity you chose and how much you're investing, payouts will also fluctuate.

So, here's a very brief rundown on how annuities work.

You have two different types of annuities to chose between. A fixed annuity is pretty much a savings account with an insurance company where you know exactly what your guaranteed payout will. A variable annuity is more like mutual funds and is determined by how your investments are performing.

Still with me? Good. Because there are also different ways, you can put your annuity together. It's like when you want your barista to customize your latte.

• Single vs. Multiple Premiums: How do you want to pay for the annuity? You can make one big payment, like if you just received an inheritance, or make smaller payments throughout the years.
• Immediate vs. Deferred: When do you want to receive payments? Inheritances, or make smaller payments throughout the years. You cash everything out at retirement or practice self-gratification and receive payments down the old.
• Lifetime vs. Fixed Period: How long will your annuity payments last? Do you want to receive money for the rest of your life or for a specific timeframe, like 5 to 25 years?

Overall, annuities require commitment and can get really complicated fast. That's why you should do your due diligence and learn more about them from trusted online sources or your financial advisor.

Sounds good. But, are there any drawbacks to annuities.

Let's be honest. Annuities have some excellent advantages — depending on the type. Mainly, that's because you'll receive a guaranteed income, which is tax-deferred. Also, unlike a401(k) or an IRA, that aren't contribution limits, and you can pass what's left to a beneficiary.

There are also some drawbacks to mention. Most notably, you'll need to watch that you don't get bogged down by fees. I'm talking about commissions from the person selling you the annuity to insurance charges and investment management fees. There are also surrender and rider charges if you aren't paying attention.

Besides being pricey, there's also some risk involved. Because annuities aren't backed by any national insurance program, if you picked the wrong insurer, you might be SOL. That's why you need to make sure that the insurer has a financial-strength rating of A or better.

I think I'm sold on annuities. But should I actually buy an annuity?

You won't like this answer. It depends. If you've maxed out your other retirement investment methods, such as 401(k) plans and IRA, then taking advantage of the tax-deferred growth from an annuity isn't too shabby of an idea.

Also, annuities can be an awesome idea if you want to diversify your retirement portfolio, are in decent health and want to reduce financial stress in retirement. Again, the main selling point is that you'll receive a monthly payment for the rest of your life. That makes budgeting a whole lot easier.

If you do decide to follow through, you can purchase annuities from;

• Annuity distributors. I'm talking large brokerage firms here, think Merrill Lynch and Morgan Stanley.
• Independent broker-dealers, such as Raymond James.
• Well-known national banks like Bank of America.
• Mutual fund companies including Vanguard and T. Rowe Price.
• Independent agents, brokers, and financial advisors.

And, there's also a new player called Due who might have upped the annuity-antre.

How Due is Changing the Annuity Game Forever

What's that? You've never heard of Due. Well, the company has been around since 2015. Originally, Due solely focused on being a top-notch invoicing platform. The company still offers a wide range of payment options, including eCash, eChecks, and ACH, but has now expanded into an annuity and pension-like program to help people just like you retire.

Can Due help stop my head from spinning from all this annuity talk?

I hear ya. Annuities can be confusing. And, if you're in unfamiliar territory here, it can be tough to wrap your head around.

But that's not the case with Due. In fact, I would say that Due might have cracked "the annuity puzzle."

The annuity puzzle?

Yeah. This was a phrase the economist Menahem Yaari coined over 60 years. The idea is that while more retirees would prefer and even be happier with an annuity, few actually did. There are several reasons why. But, it really boils down to annuities being complex and misunderstood.

With the Due, the process couldn't be any more straightforward.

• Head over to Due.com and click sign-up.
• Fill in the required information and determine how much money you'd like to deposit into your account each month. It literally only takes a couple of minutes to do this.
• Don't know how much to invest? No worries. The Due Calculator can help you quickly figure this out. Just add the sum of all the payments and interest received. Next, divide this up among the months you'll live. You can invest however much you want, though.
• Due will then set up an account in your name and invest your money. It's managed by two of the top investment firms in the nation: Blackstone (NYSE: BX) and ATHOS Private Wealth.
• You'll earn 3% interest (guaranteed) on whatever money you have placed in the Due platform.
• When you turn 65, you'll receive a "deposit" into your bank account on either the 1st or 15th of each month — you get to choose the date.

That's pretty much it. Easy, peasy.

Due Annuity sounds too good to be true? What's the catch?

There's no BS with Due. The platform tells you how much money you'll receive for the rest of your life at any time. And, you don't have to lose sleep over changing markets because, again, you will always earn 3% interest.

You also don't need to be concerned about security. Due has received regulatory certificates and only works with highly reputable insurance companies who have A++ or AAA ratings.

What about those expensive annuity fees you mentioned previously?

Due charges $10 a month. That's it. If you make a withdrawal before 65, you will have to pay a 10% penalty fee.

Speaking of withdrawals, what if I need to withdraw my money?

No problem. You can do this just by logging into your account and requesting a withdrawal. After verification, you should have your money within five business days. Just remember about that 10% penalty fee.

It sounds like Due is the "annuity for the modern-day person."

It really is. Due has taken the complexity out of annuities. More importantly, it's also made it accessible for the average person — not just the wealthy who have been gobbling up annuities.

If you think that an annuity is right for you, give a Due a chance.

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