Every individual who has savings can secure a lifetime income; a key element towards having peace of mind in retirement.
As per articles published in Time and The Wall Street Journal, retirees who have their family, friends, and loved ones – and who are assured of receiving a substantial monthly check for the rest of their lives are much happier. Studies further suggest that these individuals live longer.
This makes sense because most retirees often worry about running out of money. Therefore, when they are assured of a specific amount of income every month for life, this often removes a great deal of stress from their lives.
Initially, retirees used to receive enough money from Social Security and a traditional pension to take care of their living expenses. However, few employers have now resorted to providing pensions, putting the responsibility of saving on the employee. Social Security is equivalent to approximately 40% of the average wage earners pre-retirement income.
Income that lasts as long as you do
The question is; how can you get additional guaranteed income? Income annuities give a solution that is often overlooked. With income annuities, an insurance company converts a lump sum or chain of premium deposits into an income stream that can either begin immediately or in the case of delayed income annuities, at whatever future age you choose, normally starting no later than 85. With most annuities, there is often an option of guaranteed lifetime income. Most of these annuities allow you to name a joint income recipient; this means that your spouse can also get a guaranteed lifetime income.
According to a LIMRA Secure Retirement Institute study, annuities have both psychic and financial benefits. Retired annuity owners are more confident that they will be able to afford the lifestyles they prefer in retirement – even if they live to age 90 or older – than those who do not have an annuity.
Some 73% of retirees who own an annuity are convinced that they will live the retirement lifestyle that they have always desired, compared to just 64% of retirees who don’t. About 7 in 10 retirees who own an annuity are more confident that if they live to age 90, they will not run out of it, unlike 57% of retirees who don’t own an annuity; the 2016 LIMRA survey found.
An annuity presents a solution for creating long-term income security along with assured happiness that comes with it.
Don’t Invest Unless It’s Right for You
Even though annuities are powerful, they are not for everybody. Do not invest unless you are sure that it’s the right product for you.
Before buying, ask yourself;
- In addition to Social Security and other sources, how much income will I need to cover my expenses?
- Will I need additional income for any other person besides myself?
- For how long will I leave my money in the annuity?
- When do I expect to need income payments?
- Will I be able to have access to the funds from the annuity if I should need them?
- Do I have sufficient cash reserves to meet my expected needs?
- Am I using the funds to save for retirement, or to generate a retirement income – or both?
Once you have concluded that an annuity is a right choice, then you are at liberty to choose the type that would be best for you. With the various types of annuities available in the marketplace today, being aware of how you will use the product will enable you to make the best choice.
Most annuities offer a guaranteed interest rate and principal. However, most variable annuities offer a chance at higher returns but don’t warranty earnings or principal. Within a year, immediate annuities begin paying out income. On the flip side, deferred annuities allow you to make deposits for many years before you start taking out an income stream.
Just like a car, various models can get you from point A to point B, but the one that suits your specific needs depends on its particular features and benefits.
You can buy an annuity with either a lump-sum payment using cash or by rolling over funds from IRA, 401 (k), or another retirement account. You may also consider making a series of regular, smaller deposits over time. Until you make withdrawals, there is no tax on earnings.
A secure retirement relies on having sufficient dependable income for your lifetime to meet your basic needs and also the extra expenses that make life enjoyable. A lifetime income annuity can supplement Social Security and take the worry out of retirement because you are assured of your monthly payments even if you live past 100.