Fixed interest rate and lifetime income annuities may be suitable for those who have little to no risk tolerance, especially during retirement. Liquidity is always a critical item for purchasing a financial product with a hold position or lifetime income. But there are policy riders that can mitigate liquidity risk. Contractual guarantees are based on the financial strength of the insurance company issuing the annuity contract so it’s important to review a prospective annuity company’s ratings and balance sheet to determine their benefit paying abilities. Fixed interest rate annuities are an alternative to bonds, especially during a rising interest rate environment. Fixed annuities held for short-term periods like 3, 4 and 5 years can provide competitive returns and mitigate some of the risk in a rising interest rate environment. This type of short-term multi-annuity strategy is called “laddering,” the continual rotation of the fixed annuities until income becomes necessary or long-term rates return to the market. Even the most skilled portfolio managers find it difficult to generate 3% returns day in and day out throughout the life of their retired clients without some risk. Most retirement portfolios can’t generate guaranteed income that seniors can depend upon for their domestic obligations.   Read more…