Guaranteed Life Income

When it comes time to solidify the amount of income you’ll have in retirement, it is best to do some research and approach the problem from as many angles as possible.  It’s never a good idea to approach that long-awaited day with excess market exposure.  We’ve all seen that happen in the past.

Now, many people who thought they would retire comfortably will need to take less income or keep working.  Is there a way to guarantee a stream of income throughout retirement?  The answer is yes, but strategies for maximizing the amount of income will vary.

Do you have a pension from your employer? If yes, consider yourself lucky because those are quite rare today.

Is social security guaranteed?  Theoretically, yes but the outlook is dire and no plan has been developed that will shore up the program to keep it going.  The good news for people retiring soon is that payouts are expected to remain steady for the next thirty years or so.  Then, who knows?  With every passing day, the looming catastrophe gets bigger and bigger.

If you want something done right, you have to do it yourself.  Everyone has heard that said a thousand times and each person probably has examples of that holding true more than once in his/her lifetime.  So, what can you do?

Annuity products can go a long way in guaranteeing lifetime income.  But, watch out for pitfalls.  Many advisors don’t understand the use of annuities past the point where they cash their commission check.  The result of this widespread ignorance leaves you no options but to do some extra research.  Don’t worry, guaranteed lifetime income is worth it.

Several strategies exist for using annuities effectively in retirement.  First and foremost, you need to learn how to screen the sleazy sales pitches and discard the weaker products. Among the things to look for are:

Guaranteed Lifetime Withdrawal Benefits– Eliminate market risk from now until you retire by getting a guaranteed income basis from this rider that comes with several variable annuities.  Your basis for withdrawal income grows whether the market performs well or not.  If the market performs well, your income basis will end up being higher still so it is possible to have even more income than you are planning for.  There are many things to consider so do not move forward before you fully understand the product.

Fixed annuities with multi-year guarantees– Several products offered through financially stable companies will offer solid guaranteed rates so your principal balance will continue to grow.  The money can be taken as one lump sum in the future or converted into a lifetime stream of income.  According to a recent Wharton School/New York Life study, this can be the most effective means for assuring a stable profitable level of income no matter how long retirement lasts.

No matter how you look at it, eliminating risk is extremely important.  Fixed Annuities are the only product that can offer solid payout rates and guaranteed income without having to constantly manage investment accounts as the market shifts.  Various other Annuity products can offer varying degrees of safety and appreciation, generally in inverse proportion to each other.  To be safe, take the time to get a basic knowledge of the industry.  Picking annuities can be a daunting task- don’t be intimidated or pressured, but educate yourself first to avoid being “sold” something inappropriate.