Explain to client what an annuity does

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Your client John Smith is 45. He wants to retire at the age of 55. He plans to sell his business sometime in the next five years and he is considering using the $100,000 proceeds from the sale to purchase an annuity.

Question 1: Explain to your client what an annuity does.

Question 2: Under what set of circumstances would the annuity be desirable to Smith?

Question 3: If the annuity is purchased, what features should it have with respect to guarantees?

Question 4: If Mr. Smith does not decide to purchase and annuity, what alternative uses of the $100,000 could provide him with life income in retirement?

Reference no: EM132505186

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