retired couple in home

Should an Annuity Be Part of Your Retirement Portfolio?

Seasoned investors know a good deal when they see one. In addition to the usual suspects—a 401(k), real estate, stocks—investing in an annuity can be a helpful way to diversify your portfolio and better secure retirement.

Whether you’re playing catch-up or are just looking to do more, an annuity could be a great supplement to the annual 401(k) contribution limit of $19,500 and the $6,000 limit on Roth IRAs. Since annuities have no IRS contribution limits, you can put as much away for retirement as you’d like. Some other key benefits of this investment are that payments are tax free but, more importantly, guaranteed with virtually no risk.

But the word “annuity” is pretty broad. In general, annuities are categorized into three types. We give a basic breakdown of each below.

Fixed annuities

Just as they sound, fixed annuities have a guaranteed, “fixed” interest rate, offering the least risk and the best predictability among annuity options.

Variable annuities

Variable annuities come with an interest rate that’s based on an investment portfolio, so payments are based on the success of the portfolio. So, while there is more risk associated with a variable annuity versus a fixed annuity, there is also a potentially higher reward.

Indexed annuities

Indexed annuities have a minimum interest rate, offering a helpful balance of risk and reward. The rate is tied to a specified index and can rise higher than that of a fixed annuity. However, indexed annuities typically have higher costs and fees than fixed annuities.

What Is a Structured Settlement Annuity?

A structured settlement is a specific type of annuity that is established for a person who receives money from a settlement or jury verdict in a personal injury lawsuit.

There are two types of structured settlements:

  • Single premium immediate annuity (SPIA/immediate payment annuities/income annuities/immediate annuities)
  • Single premium deferred annuity (SPDA)

Both SPIAs and SPDAs can be either fixed or variable annuities.

Instead of handing over a large lump sum of money to the person who will receive the settlement, a structured settlement provides the recipient with guaranteed (tax-free) future payments meant to cover their long-term financial needs. After a structured settlement is put in place, there is no way to re-negotiate or adjust the terms through the primary issuers. However, when an individual with a structured settlement faces an immediate financial need, they can transfer the rights to some or all of their future payments in exchange for the lump sum of money they need.

At CrowFly, we’ve created a platform for everyday investors to purchase the rights to existing structured settlement annuities. People looking for a way to diversify their portfolios with a high-security, high-yield asset can purchase the rights to these future payments and receive a guaranteed payment stream of long-term income. At the same time, they’re helping out someone else who is in a financial bind and needs a lump sum of cash from their asset.

high security vs. low security investments

Structured settlement annuities have yields as high as five percent and are backed by insurance companies generally rated Superior (A+) or better. Risk profiles are aligned with—or sometimes better than—treasuries or other fixed-income assets.

When working with CrowFly, investors can also expect:

  • A transparent closing process
  • Protected, long-term income
  • A low-risk asset, which can be a hedge against market volatility and losses
  • To ethically support harmed individuals and families in need of immediate funds

Structured settlement annuities are especially attractive to individuals headed into retirement who are looking for a great yield. Through CrowFly, they also come with no sales commission, which means investors buy the asset directly. What you see is what you get on our platform.

Historically, everyday investors did not have access to structured settlement payment streams available for purchase; those assets were only reserved for institutions. But CrowFly’s proprietary platform makes purchasing these assets possible for individuals as well. In addition, CrowFly aims to get both buyers and sellers the most money possible from the transaction by simplifying the transaction and reducing overhead costs. Investors can apply to join the platform here, and approved buyers can browse assets available for purchase.

sample annuities available for purchase

Taking some risk out of your portfolio after retirement makes sense. However, current interest rates make new annuities a tough sell. Structured settlement annuities are akin to high-yield instruments without as much risk.

If you’re interested in joining CrowFly’s platform and browsing structured settlement annuities available for purchase, visit crowfly.com/investors or call 833-CROWFLY.
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