Why Waiting To Lock In Annuity Rates Could Cost You Thousands

Annuity payout rates follow interest rates. Right now they are still near levels we have not seen since 2007. But the Federal Reserve has started cutting rates, and insurance companies are repricing their products.

Here is what that means for you: a 65-year-old with $250,000 can lock in roughly $1,400 to $1,650 per month in guaranteed lifetime income at today's rates. If rates drop just 1%, that same $250,000 may only generate $1,200 to $1,400 per month.

That is a difference of $200+ every month. Over a 20-year retirement, that adds up to $48,000 in lost income. And that gap stays with you for the rest of your life.

The window is still open, but it is narrowing. Insurance companies typically lag rate changes by 30 to 90 days. Every policy meeting from the Fed brings us closer to lower rates.

Reviewing your options costs nothing. Not reviewing them while rates are still elevated has a real cost that compounds.