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Guaranteed Lifetime Income…How to Avoid Outliving Your Assets

Each day, over the next 20 years, over 10,000 people will turn 65 years old. Advances in medicine mean that we are living much longer than our grandparents did and it’s not uncommon to meet individuals over the age of 100 living full and independent lives. With this increased longevity comes the fear of outliving your retirement funds.

This longevity risk is further magnified by the low interest rate environment we have been experiencing in addition to the enormous national debt (approaching 20 trillion dollars), and the looming unfunded obligations of the US Government, including social security and Medicare.

How do retirees fund retirements in this day and age?

Most individuals approaching retirement do not have the benefit of defined benefit pension plans that their parents and grandparents had and are responsible for managing their own retirement assets. Recent stock market volatility and the “great recession” have many retirees looking for alternative investments to supplement their traditional stock and bond portfolios. A deferred income annuity could be a great vehicle for retirees to rely on.

Case Study- Florida Couple. Age 63 

We recently helped a couple in their early 60s who had just sold their Florida real estate business. and weren’t sure what to do with the sales proceeds from the business. Cheryl and Tim wanted to make sure that their financial planning efforts would provide:

That’s where we came in to help.

We discussed the various investment opportunities available, including:

Cheryl and Tim quickly found the annuities and life insurance options quite attractive based on the tax benefits afforded by these investments. To add to this, location proved to be a blessing for the couple as Florida life insurance cash values and annuities are 100% protected from the claims of creditors!

Our clients were also sensitive to the possibility of frivolous lawsuits from their days in the real estate business, thus, the creditor protection afforded to these investments was a very attractive feature.

We quickly eliminated variable and indexed annuities from our discussion as they are quite expensive due to the ongoing fees for these products and the fact that they are subject to market fluctuations. Ultimately, Cheryl and Tim settled on selecting deferred income annuities as their investment vehicles because there are no annual fees or ongoing expenses and all stated values are contractually guaranteed. In addition, the initial investment in the deferred income annuity is guaranteed through a death benefit, so there was no risk of losing their money.

If you are concerned about outliving your assets during retirement and are looking for a guaranteed source of income for life after retirement, please contact us.

Published on: 09.21.17

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