Your Retirement Needs Guaranteed Income and Growth

Often retirement assets are targeted to generate income to fund retirement. In essence, the assets are illiquid, held hostage for income purposes and exposed to market volatility. Beside the illiquidity and market risk, the income is not guaranteed, nor is there a guaranteed hedge against inflation. The real complication is the variable of mortality risk, i.e., the retiree living longer than expected. So the quandary is how to grow your estate when the income goal dominates the use of your money. A guaranteed lifetime income annuity with a cost of living adjustment can address three retirement risks: guaranteed income, annual increases in income and income you can’t outlive. The real surprise is a lump-sum deposit into an annuity may be less money than the assets presently being used to generate income. If that’s the case, then assets can be freed up to target growth using stocks, mutual funds or ETFs according to your risk tolerance.

There are a couple annuity products you should consider. The first one is a deferred income annuity (DIA). This annuity funds qualified longevity annuity contracts to delay a portion of your required minimum distributions from your qualified retirement plan. The other is a single premium immediate annuity (SPIA). Watch the interview with Certified Annuity Specialist Liz Cornell [url link]. Both SPIAs and DIAs can be configured to generate lifetime income you can’t outlive. http://rightonthemoneyshow.com/your-retirement-needs-guaranteed-income-growth-liz-cornell/ A major component of lifetime annuities is mortality credits based on the insurance company’s actuarial calculations. Insurance companies use the law of large numbers to determine the mortality credits they apply to their income scenarios. Guaranteed lifetime annuities can generate income you can’t outlive and free up assets for other investment goals.

Annuities are not insured by the FDIC or any government agency. So it’s important to have your financial adviser review the balance sheet and ratings of the insurance company before you purchase an annuity.