If you live long enough, there is a fifty-fifty chance that you will end up with some form of dementia. You will not be capable of handling your own finances. It is a possibility that you need to plan for. You should have a General Durable Power of Attorney in place so that someone you designate can handle your finances. However, what if unexpected costs occur and you run out of money? You should have a plan for that possibility as well.
One thing that you might want to consider is an annuity. By surrendering principle now, you receive an annual income when you might need it. You usually get a higher return for the investment than a bond or CD and you do not take the risks of investing in stocks. The one caveat is that the insurance company you purchase the annuity from needs to remain solvent or you can lose your principle.
Annuities are not for everyone. Used wisely, they can be an excellent part of a larger estate and retirement plan. Talk to your attorney about how they might fit into your plans and about other alternatives for taking care of your needs as you age.
Stephen A. Mendel, Estate Planning Attorney
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