The statistics are staggering. According to the Government Accountability Office (GAO), a husband and wife both aged 65 have approximately a 47% chance that at least one of them will live to his or her 90th birthday and a 20% chance of living to his or her 95th birthday. As life expectancy continues to climb, the fear of outliving one’s assets has become top-of-mind for most Americans. Today, it’s becoming more important than ever to put retirement strategies in place that guarantee lifetime income.
The GAO’s June 2011 report to the U.S. Senate’s Special Committee on Aging made several specific recommendations to help protect or improve an individual’s retirement security.
One of these recommendations specifically called for considering an income-generating annuity as part of an investor’s overall retirement plan:
• Instead of opting for a lump sum payout from an employer-sponsored defined benefit plan, middle-income retirees should consider converting at least part of their savings into an inflation-adjusted annuity or choose a guaranteed stream of income from an annuity.
Why an annuity instead of a lump sum payout? Annuities provide guaranteed lifetime income.
An annuity is a contract between you and an insurance company, which provides a stream of income, income that you cannot outlive. There are different types of annuities that may fit your portfolio, depending on your individual risk tolerance and retirement timeline. For example, if you want minimized risk, tax-deferred growth and a guaranteed interest rate then a Fixed Deferred Annuity may be right for you. It offers the ability to convert its accumulated value into an income stream that lasts your lifetime.
If you prefer the opportunity for a higher return then you may be interested in a Fixed Index Annuity in which your money grows tax-deferred at an interest rate based on changes in an index, such as the S&P 500. With this annuity in your portfolio, your principal is protected with the opportunity to grow as the market rises. There are other annuity options too, some for more conservative investing and some with greater risk but more growth potential.
We can help you take the uncertainty out of retirement income planning. Simply click here to request a free Income for Life Illustration. Your Income for Life Plan shows you the top 3 income generators tailored specifically to you. With this information, you’ll know without a doubt what income you can expect during your retirement years.
Or, call us at 972-473-4700 to talk more about whether it makes sense for you to convert a portion of your savings into an income-generating annuity. With thoughtful and careful planning we can help you stop worrying about your retirement security, and instead, focus on enjoying a secure retirement.
Cathy DeWitt Dunn, President of DeWitt & Dunn, LLC, is the driving force behind Women Money & Power. With decades of experience in the financial services industry, Cathy specializes in helping individuals and families strengthen their retirement outlook with lifetime income solutions not available at traditional brokerage houses. She has helped countless investors start their personal journeys towards a stronger retirement with strategies designed to protect principal, generate retirement income that can’t be outlived, and eliminate market loss.