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August 10.2025

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Are Annuities Better Than CDs for Retirement Income Security?

Glass jar labeled 'Retirement' with coins, illustrating annuities vs CDs.

Why Understanding Retirement Income Options Matters

For those nearing retirement, the urgency to secure a reliable income cannot be overstated. The shifting landscape of retirement funding — with dwindling pensions and uncertain Social Security benefits — has pushed many to critically evaluate their choices. This article focuses on two common products: certificates of deposit (CDs) and annuities, which offer distinct advantages and serve different needs in retirement planning.

CDs: The Safe but Limited Investment

Certificates of deposit are characterized by their simplicity and predictability. They allow you to deposit money for a fixed term at a fixed interest rate, backed by FDIC insurance. This safety makes CDs appealing for short-term savings goals or as a a solid foundation within a diversified portfolio. However, the allure of CDs can be misleading. With interest rates often failing to keep pace with inflation, they don't provide the robust protection that many retirees seek. Moreover, once a CD matures, it merely returns your principal plus interest, which may not address lifetime income needs.

Annuities: Addressing the Risk of Outliving Your Savings

Conversely, annuities are tailored specifically for long-term income security. These financial products can transform a lump sum into guaranteed monthly payments for life, alleviating the anxiety tied to outliving one's savings. For retirees in good health who expect longevity, the advantages of annuities become clear. Options like immediate annuities ensure that income continues flowing, regardless of market conditions, allowing retirees to manage their finances in a more predictable way.

Weighing Your Options: Choosing What's Best for You

The decision between CDs and annuities ultimately depends on individual financial goals and circumstances. While CDs serve as a conservative investment, annuities can provide the safety net many retirees need. Understanding your retirement income tax strategies, long-term financial objectives, and the intricacies of these financial tools can guide you toward a decision that best aligns with your needs.

Actionable Steps to Take Now

If you're feeling overwhelmed by your financial planning options as you approach retirement, you're not alone. Eliminate the confusion and make informed decisions by reaching out to a local retirement advisor. Call Terrijo Parker today at 231-571-6100. She will provide personalized advice without pressure or fees, helping you navigate the complexities of retirement income planning.

Retirement and Financial Security

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Are Annuities Better Than CDs for Retirement Income Security?

Why Understanding Retirement Income Options Matters

CDs: The Safe but Limited Investment

Annuities: Addressing the Risk of Outliving Your Savings

Weighing Your Options: Choosing What's Best for You

Actionable Steps to Take Now

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