Most Retirees Need Lifetime Guaranteed Income

Having three types of guaranteed lifetime income can help retirees address the costs of longevity and mitigate their fears of asset depletion.

Several concepts point to the need for perpetual and worry-free income: 

• Record life expectancies for females may average near 89 years and married females 93 years.
• The United States’ age-100 population is estimated to be around 72,000 but may eclipse 1 million by 2050.
• New retirees are living as if 70 is the new 50, and 80 the new 60.

Pensions, nearly a given for World War II and Korean era retirees, have traditionally provided lifetime payments based on a combination of tenure and salary. However, employer pension offerings have been in steep decline in the private sector.

Social Security is guaranteed for life, and can continue to a surviving spouse. Though eligibility begins at age 62, distributions increase when delayed until age of 70. Patience is rewarded by 8% (simple interest) annual increases for deferment from age 66 to 70, a guaranteed return nearly impossible to find in today’s investment environment.

Deferred index annuities can also provide lifetime income featuring growth participation in upside markets and protection against loss in down markets. Now Wall Street names like like JP Morgan and Barclays’ have joined the provider market and lent credence to this formerly under-the-radar lifetime income tool.

Given the uncertainty of life’s length, and that a surviving spouse can live decades longer than their mate, it behooves retirees to have multiple sources of guaranteed lifetime income.