Key Takeaways
- Annuities, offering structured payments that can last a lifetime, serve as a pivotal investment option for women since they usually live longer than men.
- Annuities extend additional benefits, like long-term care coverage, that address the unique needs of women.
- A fixed deferred annuity is often the most suitable, aligning well with the financial needs and goals of many women.
The Advantages of Annuities for Women
Annuities are not just financial products; they are financial empowerment tools that can be specifically beneficial for women, who often face unique financial challenges.
Women generally live longer, lean towards safer investment options and, because of various societal and professional disparities, might not have the same access to traditional retirement savings plans as men. These unique challenges call for financial strategies that are just as unique.
Annuities, with their structured and reliable payment plans, offer such a tailored solution, acting as a financial bridge to help lessen the impacts of these disparities between men and women.
- 1. Annuities are more profitable for women over the long term.
- Women have a longer life expectancy than men. According to Harvard Medical School findings, women have a life expectancy of 79.1 years, while men have a life expectancy of 73.2 years.
Once a woman converts an annuity into a stream of payments, it can pay out for the rest of her life. So, women stand to gain even more money from an annuity than men. This can also help counter women getting less money because of the gender pay gap. - 2. Annuities provide inclusive savings options.
- Because women are underrepresented in the workforce, they have less access to traditional retirement-saving strategies. According to 2023 research from the U.S. Census Bureau, men outnumber women among full-time, year-round paid workers: 61.7 million compared to 47.8 million, respectively.
Annuities are a nontraditional savings vehicle available to help women grow their funds should they lack access to employer-based options. - 3. Annuities don’t have a contribution limit.
- Because annuities don’t mandate contribution limits, women can catch up quickly on their savings goals.
- 4. Annuities are customizable.
- Your annuity contract can be customized with riders. Some riders provide coverage for long-term care. According to the American Association for Long-Term Care Insurance, women are more likely to require long-term care than men. More than 70% of nursing home residents are women. There are other riders available with unique customization features.
- 5. Annuities can provide a secure, low-risk income for life.
- According to the Harvard Business Review, women are usually more risk-averse in terms of their investments than men.
5 Ways Women Can Benefit From Annuities
Another benefit to consider is an annuity’s unique tax advantages. While this benefit isn’t specifically catered to women, it’s still important to note. Annuities have tax-deferred investment growth, meaning any gain or interest in an annuity will grow without being taxed until the money is withdrawn.
While women-oriented data and statistics are important when considering an annuity, a first-hand account holds weight too.
How soon are you retiring?
What is your goal for purchasing an annuity?
Select all that apply
Realizing the Benefits: A First-Hand Account
Our editorial team interviewed annuity customer Syble Solomon. She explained how she benefits from her annuity and the ease of the buying process.
- How did your annuity give you peace of mind?
Knowing that we weren’t going to lose money and knowing that I was protected for the rest of my life made it much easier. We tried to figure out the chances that I would live a long life and took all of this money, which was a substantial amount, and betting on it. I’m not a gambler.
- What feature of an annuity was the most important to you?
The most important thing to me was the security.
- How was the buying process?
Overall, the buying process went fine. The conversation was difficult, but the process was pretty easy. It was difficult to make a decision until I could see the options. You know, that we weren’t going to be losing the money, and it wasn’t just going to an insurance company and all the money we worked for would be gone from our family.
How Do I Know if an Annuity Fits My Needs?
If the benefits listed above sound appealing to you, an annuity could fit your needs.
Consider the following checklist to help you determine if an annuity is best for you:
- Do I expect to live longer than my spouse?
- Do I need a savings vehicle without contribution limits?
- Do I want tax benefits?
- Do I want a secure stream of income for life?
- Do I want coverage for long-term care or other customizable options?
- Am I risk averse?
However, it’s in your best interest to reach out to a licensed financial advisor before making a purchase. They can help break down average annuity fees and costs, risk levels and the right amount to invest.
They can also help you determine if annuities commonly purchased by women suit your needs.
Worried About Your Retirement Savings?
Types of Annuities That May Work Best for Women
A deferred annuity is likely to work best for women looking to build up their retirement savings. You contribute money over time, and later it turns into regular payments for years — or a lifetime.
A deferred annuity differs from an immediate annuity, which is usually purchased with a large lump sum of cash. Not all women have a lump sum available to invest, making a deferred annuity a better option.
Deferred annuities can be fixed, variable or indexed.
If you want low risk, minimal fees and simple terms, choose a fixed deferred annuity.
If you want an annuity that:
- You contribute money to over time
- Has minimal fees and simple returns
- Is low risk
- Has a straightforward contract
Consider a: Fixed Deferred Annuity
Currently, fixed annuities offer a rate of over 5%. Find out more about our rates, which are updated weekly.
However, the best annuity depends on your personal situation. For more risk and higher potential profit, consider a variable or indexed annuity instead.
Trust and Reliability: Choosing the Right Provider
As is best practice, women should research the trustworthiness and financial strength of any annuity provider before purchasing. Our editorial team found MassMutual was the best annuity provider for deferred income annuities.
MassMutual
Financial strength ratings are based on 2022 AM Best data.
Provider Details
Since its founding in 1851, MassMutual has offered insurance and retirement products including life insurance, annuities and IRAs. The Massachusetts-based company holds an A++ rating from S&P Global Ratings.
Annuities Offered
- 1 Fixed
- 1 Deferred Income
- 1 SPIA
Pros
- A- Rating from BBB and 0.03 NAIC Complaint Index score
- Income annuities have lots of payout options
- Low minimum premium for income annuities
Cons
- Fewer product options available than from other providers
Our Take
MassMutual has provided life insurance and annuity products for over 170 years. Today, the company offers a fixed annuity as well as two income annuities. All the annuity products have a $10,000 minimum premium and relatively low surrender charges between 4% and 8%.
MassMutual’s income annuities can be customized in several ways. The company offers several payout options and optional inflation protection. RetireEase Choice, the deferred income option, allows annuity owners to defer payments from 13 months to 30 years after the purchase date.
Secure Your Retirement