As a wealth management expert, I’ve long believed that those who have a well-balanced portfolio are at a greater advantage as they enter their retirement years. I call this approach the three-legged stool: a balanced portfolio needs all three elements of income, growth and protection in order to be successful.

Investors who maintain a good balance of these three are better off in downswings in the market and are more likely to succeed in maintaining a secure nest egg that they can draw from as they grow older. This approach can reduce financial strain and result in a more stress-free lifestyle that retirees appreciate.

One way to keep your investment portfolio more secure as you age is through the use of annuities. An annuity is a guaranteed source of income that you receive from an insurance company.

To receive annuity income, you’ll need to purchase a contract that is customized for you and make regular premium payments. Typically, you’ll make these payments for 10 to 30 years before your annuity begins to pay you benefits.

When deciding on annuity investment products, keep these 4 tips in mind:

1. Determine How Much of Your Portfolio You Want Protected from Losses
When you grow older, more of your portfolio should consist of risk-averse products. As a rule of thumb, I suggest to my clients that the percentage should be equal to your age. Therefore, if you are 65, then 65% of your portfolio should be completely protected against losses.

What this means is that while the remaining portion of your investments may go up or down depending on the current investment market, 65% of your investments should be fully protected from swings. Their worth will remain the same or be subjected only to increases in value.

2. Assess Your Portfolio Mix for Safety Products
When you're considering purchasing an annuity product, it’s important to review your current portfolio to determine how much consists of investment products that are subject to risk and how much doesn’t. Common safe investments include:
● High-yield savings accounts
● Certificates of deposit
● Gold
● U.S. Treasury Bonds
● Series I Savings Bonds
Riskier investments, such as stocks, cryptocurrency, futures, and options should compose a smaller portion of your portfolio. These types of investments may result in high returns, but they are also subject to market losses.
Market losses can be more difficult to recoup as you grow older, as you’ll have less time to realize changes from your allocation strategy.

An annuity is a safe investment designed to provide you with a guaranteed stream of income once it matures. If you’re currently heavily invested in risky investments, the annuity can give you peace of mind that a part of your portfolio is not subject to changes in the market.

3. Find an Advisor Who Is Experienced in Annuity Products
Rather than shopping around on your own, it is worthwhile to seek the advice of an advisor who has experience in annuity products. They can evaluate what you are trying to accomplish by adding an annuity to your portfolio. Afterward, they can make recommendations for specific products that fit your needs.

Choosing an annuity product by yourself may result in less value for your money or an income stream that doesn’t quite reach your goals. You’ll be much better off seeking input from a professional annuity expert.

4. Pick the Right Annuities
When you consult with an advisor to select an annuity, they’ll likely provide you with several options to choose from. By far, the best annuity products are issued by large, financially healthy insurance companies. When selecting your annuity, make sure it has a guarantee against market losses, strong growth potential, and few annual fees.

One particularly strong feature of annuities is that there is no limit to how much money you can invest in one after taxes. This lack of a limit is a huge advantage over such products as 401(k)s or IRAs that have contribution limits. Keep that in mind when you’re deciding how much you want to spend on your annuity.

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