Guaranteed Income For Life! – Income Annuities Are Back!

Guaranteed Income For Life! – Income Annuities Are Back!

What is the most popular question my new clients ask me in these difficult times, you ask?  That is a simple one.  I am often asked; “Do you think my retirement savings will last through my lifetime?”  Sadly so, I often answer with bad news; “Only if you’re headin’ to the great blue yonder sooner than you think.”  In other words: “If you die early.”

Running out of money is no fun.  It happens all the time.  My office is located next to a low-income apartment complex called “Trinity Towers”.  In this complex, there must be a few hundred low-income seniors that are barely making ends meet.  They often visit my office and hope somewhere in my desk is a magic rabbit.  Sometimes it can be a real downer when I cannot help in those situations.

Outliving your income is avoidable, especially if you start early and don’t wait to address the issue until funds are almost dry.  For centuries, income annuities were the standard to promise a lifetime income for retirement.  In fact, it still exists today with Social Security, traditional pensions, and the standard over-the-counter immediate annuity.  Unfortunately, Social Security is not enough and most do not have pensions.  Seniors are now faced with creating lifetime income on their own.  In the recent past, creating guaranteed income for life was a big decision.  The retiree had to forfeit a large deposit in return for that monthly cash flow for life.  These were called immediate annuities as mentioned above.  With these, the retiree had no access to the principle, only the monthly income, so it was a big decision, and it appealed to few seniors.  The thought of trading cash for income sounds great, but what if I change my mind, or die early?

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Now, the ballgame has changed – totally.  One does not have to forfeit the principle to receive lifetime income that is guaranteed for life.  In fact, if you start lifetime income, you can even stop the cash flow at certain intervals and restart it again when (or if) you need it again.  These new income plans are still nestled inside the safety of a fixed annuity, so you have all of the protection that is possible in a fixed insurance product with a strong company.

Here is an example of a plan I use for my clients today:  If Beverly, age 70, deposits 0,000 into the Lifetime Income Plan, she will be able to start an income plan after one year of roughly 8.00 per month.  That is a 6.93% cash flow for the rest of her life.  If she waits 5 years to take the income, she will receive 8.00 monthly for the rest of her life.  And if she has the time and funds to wait 10 years, she will receive ,385.00 monthly for life.  Not too shabby.

The numbers even work sweeter if the client is age 50.  If at age fifty, Eleanor places 0,000 into the Lifetime Income Plan and waits 20 years, the monthly income is 63.00 per month.  These numbers are simplified.  If you have half this much to invest or five times the amount, just multiply my figures here by the respective magnitude.  For example, if you are Eleanor’s age with 0,000, then your monthly check in 20 years will be ,815.00 (63.00 times 5).  Remember, even though the income is guaranteed for life, Eleanor does not have to continue with the plan if she chooses.  She may stop the plan and walk away with the unpaid balance plus all of the earned interest!

Additionally, if she were to die while Lifetime Income was being paid, her beneficiary would receive the unpaid balance.  So it seems to be a win for you if you live, and a win for your family if you die early.  The money is never forfeited and the client, or the family, will receive the funds eventually, all with built-in guarantees that really do work!   Always be sure to weigh all your options, seek good advice and you‘ll most likely make the right decision.

The future is uncertain, especially with record government spending, deficits, the falling dollar, and a mounting national debt.  This may be the best time to lock in some guarantees for your future security.  Maybe you can ladder out a few Lifetime Income Plans that can be tapped at five-year intervals.  If you have wondered what to do with idle cash, a failing mutual fund, or even if you just sold some property and need income – consider Guaranteed Income for Life.  It may be the best deal around since income annuities are back!

Jason ValaVanis is a registered representative with and securities sold through LPL Financial, Member FINRA/SIPC.

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