Presented by David Corwin Living too long is a risk that many seniors are faced with today. Studies show that a 65-year-old man has a 34% chance of living to age 90 and a 17% chance of making it to 95. A 65-year-old woman has a 44% chance of living to age 90 and a 23% chance of reaching 95. These longer life spans present wonderful blessings, but difficult challenges with a real risk of running out of savings that people have worked a lifetime to create. With proper planning and forethought, seniors can gain some peace of mind in knowing that every month they can receive a check in their “mailbox” for the rest of their lives. The following types of annuities are a remedy for the fear of outliving income and ways to provide for “mailbox money.”
- Single premium immediate annuities (SPIA) offer income for life or a specified period of time. To accomplish this, a lump sum has to be traded to create the income stream, and the annuitant loses control of the asset.
- Fixed annuities afford annuitants 100% control over the asset, allowing them to withdraw money as needed, but how long the funds will last is dependent on withdrawals and interest gained on the contract. Generally, penalty free amounts are withdrawn so additional fees and charges aren’t incurred. A drawback could be that income may not last for life.
- Lifetime income riders are available on many fixed indexed annuities. These are popular because they guarantee a future result. This allows a client to rest easy, retain control of their asset, and have an income that will continue for a lifetime.