Final answer:
An annuity is the most suitable financial product for Julia as it offers a steady and reliable income stream during retirement, which aligns with her need to supplement her Social Security and pension without exhausting her savings.
Step-by-step explanation:
Julia, who will retire next year at age 66, is concerned that her Social Security and pension might not cover all her expenses and is seeking a financial product that could help supplement her income without depleting her savings. Out of the options presented, an annuity would be the most suitable choice for Julia. An annuity is a financial product that provides a fixed sum of money each year and can be purchased with a lump sum or over time, offering a steady and predictable stream of income during retirement. This can help Julia manage her finances better, knowing that she has a guaranteed income in addition to her Social Security and pension.
While a 401(k) plan is typically used to save for retirement and has tax advantages, it wouldn't be applicable to Julia's situation since she's already on the verge of retiring and has likely already utilized such a plan if it was available to her. Certificates of Deposit (CDs) and life insurance policies could be part of a broader financial strategy but do not provide the regular income stream that Julia is seeking to supplement her Social Security and pension.
Therefore, considering Julia's need for a reliable, consistent income that could potentially last into her 90s, an annuity would be the most practical and secure option to supplement her retirement income. CDs could be a lower-risk investment option to store and grow a portion of her savings but would not provide her with the regular income she is seeking.