Immediate Annuities Can Be A Guaranteed Income-for-life Survival Kit

IMMEDIATE ANNUITIES CAN BE A GUARANTEED INCOME-FOR-LIFE SURVIVAL KIT
By Michael Albertson, President, AnnuityAlert
Many people dream about an early retirement. But for millions of Americans who suffer a medical disability or are laid off late in their careers, entering the ranks of the unintentionally retired can be an unwelcome surprise

According to the National Center for Health Statistics, a 75-year-old today can expect to live until age 86.9. Depending on their health, family history and genetics, some people can expect to live far longer than average.
why, for the suddenly retired, ensuring that their retirement investment portfolio lasts a lifetime is critical.
Taking a chance on income withdrawals
Planning your income withdrawals take some time and some candid estimations about your choice of lifestyle and what it will take to support it.
The accompanying chart gives a rough indication of what it will take to see your income last throughout a hypothetical 25-year-retirement.
For example, an investor who is hoping to lock in a 100% chance of having their income last through a 25-year retirement might be best-suited to choosing a portfolio mix that is weighted 20%/80% between stock and bond investments and undertaking withdrawals of 4% a year. Increasing the withdrawal amount to 6%, however, would lower the chances of success to 42%.

An immediate annuity on the other hand, could guarantee at least some level of annual income would be available to you no matter how long you lived.
In its basic form, an immediate annuity is bought with a single upfront payment and guarantees lifetime income. Contract owners can choose to receive income payments for life, or for a shorter period of time. Payments are based on a fixed interest rate and can be paid out on a monthly, quarterly or annual basis.
The size of the payment depends on how much money is invested, the investor’s age and sex and whether the annuity is for an individual or a couple.

Buyers may also choose optional features, including inflation protection and a withdrawal benefit in an emergency. When optional features are added, however, the monthly payout is reduced.
While an immediate annuity may be an ideal income survival kit for some retirees, financial advisers generally agree it is not for everyone. Prospective buyers need to do some homework studying both their own finances and the annuities available in comparison with other investments.

For many suddenly retired investors, though, an immediate annuity can help achieve one goal: the greater peace of mind that comes with having an income they cannot outlive.

About Michael Albertson President of AnnuityAlert, Michael Albertson has more than a decade of experience in providing advice and insights to individuals and families who are facing investment challenges. Michael is also the author of DECISION ROADMAP: Are annuities right for you? Free downloads are available at Michael can be contacted at [email protected] or 800.000.0000
Represents historical equity and fixed income performance of S&P 500 Index and Barclays Capital Aggregate Bond Index for 25 year period ending 12/31/11. The illustration is hypothetical only and does not represent the performance of any investment. No one can invest directly in an index. Performance for other periods will vary.
Guarantees apply to certain insurance and annuity products (not securities, variable or investment advisory products) and are subject to product terms, exclusions and limitations and the insurer’s claims-paying ability and financial strength.

 

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