Date: October 4, 2006
For more information contact: Eileen Mallow, Assistant Deputy Commissioner, (608) 266-7843 or eileen.mallow@wisconsin.gov

Planning for Retirement - Is an Annuity Right for You?

Madison, WI—Money Smart Week^SM Wisconsin provides the opportunity for people to start thinking about planning for retirement. Annuities are among a number of savings options consumers have to consider when planning for retirement. Because there are many different types of annuity contracts and a variety of annuity options available, it can be difficult to understand.

"Annuities can be an effective investment tool for consumers wanting a steady stream of income for retirement," said Jorge Gomez, Commissioner of Insurance. "But annuities are complex investment products that may not be right for everyone."

Most annuities are long-term contracts and generally should not be considered or purchased for short-term purposes. You need to think about what your goals are for the money you may put into the annuity, as well as the risk you are willing to take. Ask yourself the following questions:

• How much retirement income will I need in addition to my Social Security, pension, savings and any other income or investment sources?
• Will I need an income only for myself or also for someone else?
• How much can I afford to pay in premiums?
• How will the annuity contract fit in with my total financial planning?
• How long can I leave money in the annuity?
• When will I need income payments?

"Knowing the answers to the above questions will help you in deciding if an annuity is right for you." Gomez said. "You should also consult your tax advisor to discuss your individual tax situation."

As with any insurance product, it is important to always review the contract and be sure you understand the terms and conditions, as these will vary from contract to contract. Compare contract summaries and policy benefits for similar contracts from several companies in order to choose the one that best fits your retirement needs.

Publications such as Understanding Annuities and the Wisconsin Buyer's Guide to Annuities can be ordered free from the agency by writing to OCI Publications, P.O. Box 7873, Madison, WI 53707-7873, calling 800-236-8517 or visiting the OCI Web site at oci.wi.gov.

Money Smart Week^SM Wisconsin was created by the Governor's Council on Financial Literacy which Governor Jim Doyle formed last year to improve financial literacy in Wisconsin. The first-year campaign is modeled after similar promotions run by the Federal Reserve Bank of Chicago in the cities of Chicago and Detroit. It is envisioned as ongoing from year to year. Wisconsin's initiative has the support of the Federal Reserve Banks of both Chicago and Minneapolis.

Created by the Legislature in 1871, Wisconsin's Office of the Commissioner of Insurance (OCI) was vested with broad powers to ensure that the insurance industry responsibly and adequately met the insurance needs of Wisconsin citizens. Today, OCI's mission is to lead the way in informing and protecting the public and responding to its insurance needs.