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Myths and Facts About Lifetime Income With an Annuity

Myth: Annuities are only for conservative or inexperienced investors.

Fact: If appropriate, annuities are one way to strengthen and diversify your retirement portfolio, no matter your investing style or level of experience. Depending on your personal retirement needs, annuities could be a very important part of your retirement plan, especially if you're seeking guaranteed lifetime income to cover essential expenses.

Just as life insurance plays an important role in protecting your loved ones against your dying early, an annuity can protect you against an increasingly frequent occurrence: living so long that you outlive your savings.

Myth: Annuities are too expensive.

Fact: As you evaluate if an annuity is right for you, consider the value of the annuity as part of an overall balanced portfolio.  Other investment products may have lower fees but annuities offer income benefits and guarantees that other products cannot.

Some features of annuities — such as guaranteed lifetime income — can’t be found in other investment products and have additional fees. As you start looking at specific annuities that meet your personal retirement income needs, you should compare the fees for that annuity with other investment options available to you.

Myth: If I don’t live as long as I expect, I just lose my money if I buy an annuity.

Fact: In most cases, customers choose a lifetime income annuity with beneficiary options that ensure payments either continue to a beneficiary for a set period or have a “guaranteed return of premium”. This means the payouts from your annuity — no matter how long you live — will equal at least the amount you put in.

Many variable annuities with income benefits offer a return of premium death benefit as well as enhanced death benefits that may be added for an additional cost. If this type of protection is important to you, please mention that when you speak with us about the features available with an annuity.

Myth: The guarantees on an annuity are unreliable.

Fact: The guarantees on an annuity are backed by the claims-paying ability of the issuing insurance company. That means you should purchase an annuity from a company that you trust and that you believe will be able to deliver on its obligations outlined in your annuity contract. Wells Fargo Advisors conducts detailed due diligence to select some of the best insurance companies and annuities available, and we also provide ongoing reviews of carriers’ financial strengths.

Myth: Annuities won’t help me keep up with the cost of living.

Fact: Annuities come with many different features. One feature is a cost-of-living adjustment, where the payment to you increases with the rate of inflation. If this feature is important to you, let our financial professionals know and they’ll find an annuity that offers this benefit and let you know the cost associated with it.

Contact a Wells Fargo Retirement Professional for help deciding.

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