What Do You Want Your Money to Do & When Do You Want It to Start

What do you want your money contractually to do for you?

Many investors and savers envision their money buying them things or sustaining a certain lifestyle in order to be happy in retirement. But there are so few guarantees in life, especially when events outside your control can turn your dreams into a nightmare.  If we learned anything from the market meltdown and housing debacle of 2008, it is not to trust the financial axioms of the past as ongoing paradigms of the future. That’s where annuities can play a significant role in your money thinking. You can’t fund your future exclusively on assets that are exposed to risk. You need financial products that contractually guarantee what you want your money to do. When your 401k Plan was decimated in 2008 by 30% to 40%, five year-fixed rate annuities were around 5%. Today five year-fixed rate annuities are around 3% with a current market as hot as it was back in 2008. Most people want some portion of their portfolio contractually guaranteed so they can still buy the things they want and/or sustain a comfortable lifestyle.

When do you want those contractual guarantees to start?

Many investors and savers have an idea when they want to retire, but generally no clue how long they will live. Retirees love the fact that their monthly Social Security check is delivered to them like clockwork, sometimes with a cost of living adjustment. Some retirees received their Social Security at age 62, others at age 66 and still others wait until age 70 to maximize their benefits. They knew when they wanted their benefits to start and are banking on their benefits to be paid for life. But Social Security benefits are generally not enough to sustain a good retirement, so lifetime annuities are a good place to fund any budget shortfall that Social Security doesn’t cover.

Guaranteed lifetime annuities can provide an income you can’t outlive, even if you live to 122 years, 164 days, as Jeanne Calment did. Sound fantastic? Was Jean just a mortality outlier? How about tri-centurion and supercentenarian teenager Susanna Jones who died at 116 years old?  Only an anomaly?  What about all the seniors who are age 100?  There may be 1 million centurions by 2030, that’s entirely plausible! And that could be you! So when do you want your money to contractually start and how long do you want it to continue?