Are you prepared for retirement? Will you have enough money to pay all of your bills and live comfortably for the rest of your life? When you stop working, you will still need to generate a stream of income. Although you might be able to live quite comfortably on your savings for 10 or even 20 years, if you live long enough, that money will be depleted. You have to put your safe money someplace other than a safety deposit box. One of the best ways to ensure that you will have a guaranteed amount of income as long as you live is to purchase a longevity annuity.
What is a longevity annuity?
A longevity annuity is a relatively new product offered by a number of major life insurance companies. It has been gaining enormous popularity as Baby Boomers are now starting to retire in large numbers and are looking for ways to provide a guaranteed income as they live out their golden years in retirement. A longevity annuity is a single premium deferred annuity, which means that you pay a lump-sum to the insurance company to buy the annuity today and, in return, you are paid a specific amount of income each month, beginning on a specified date in the future,10 to 40 years out.
Sample of Longevity Annuities You can Buy
Insurance companies market longevity annuities under many different names. All of the insurers below are offering essentially the same product, although the payouts can vary by company.
- American General Future Income Achiever
- Hartford Income Annuity
- Lincoln Deferred Income Solution
- Met Life Longevity Guarantee
- New York Life Guaranteed Future Income Annuity
If you want to get the best longevity annuity out there, please give us a call. At Advanced Capital Management, Inc., our highly skilled and experienced representatives can compare the features of the many different longevity annuities that are available, and help you find the best longevity annuity to meet your future income requirements.
How Does a Longevity Annuity Differ from other Annuity Products?
No control during the waiting period
When you purchase a longevity annuity, you do not have any say in how the issuer of the annuity invests or handles the money you paid. When you sign the contract, you know exactly what amount you will receive and exactly what date the payments will begin. As long as you are happy with those terms, there is really no need to worry how the insurance company uses the funds you turned over in exchange for the annuity.
Other annuities can give you growth potential during the accumulation phase, which could result in a higher payout when you begin receiving payments.
- An equity index annuity of fixed index annuity allows you to participate in the growth of an underlying index like the S&P 500. It guarantees a minimum rate of return, but limits your participation in the gains of that index in return for never losing any of your principal in a down market.
- A hybrid annuity combines some of the different features of fixed and variable annuities. There are different types of hybrid annuities that can have different levels of growth potential based upon the underlying investments they contain.
Potential for a higher payout
- A single premium deferred annuity is a less complicated type of product than many other annuities. Because of its relative simplicity, a premium deferred annuity is less expensive for the issuer to administer, and those reduced costs allow you to earn a higher payout when your stream of income begins. You can increase the periodic payments in a number of ways.
- Delaying the period of time from when you purchase the annuity until when you start receiving regular payments will result in larger periodic payments. The insurance company will be able to use the additional time to earn an additional rate of return on the money you invested. If you start taking payments at 80 instead of 70, you technically have fewer years to live and all annuity payouts are based, at least in part, on life expectancy.
Who Should Consider a Longevity Annuity?
- A 65 year old who does not anticipate needing additional income until he turns 80.
- A 52 year old who wants to supplement her Social Security income at age 67.
- A 40 year old who is worried that Social Security will not be around when he retires.
Advanced Capital Management can offer you a safe alternative to the risky stock market for your money. Immediate deferred income or longevity annuities have many attractive features that will help you reach your retirement income goals. Allow us to show you the difference in payouts between an income rider annuity and a longevity annuity. You might be surprised at just how much more income you can receive by choosing the right annuity.