Calculate your estimated life expectancy at the link below. The estimator is a free tool from the Social Security Administration website.
http://www.socialsecurity.gov/OACT/population/longevity.html
Is there a risk in living too long?
OK, that question sounds a bit gloomy. People are living longer today and one of the biggest worries for those thinking about retirement is whether the funds they have set aside will last as long as they will live. With the rise of “defined contribution” retirement plans like the 401k, many baby boomers will NOT have traditional pension plans to fall back on. This means they must face the formidable task of turning their retirement dollars into income and making those funds last.
Follow the link below – another free tool from the Social Security Administration website – to estimate how much you may receive in Social Security benefits.
http://www.socialsecurity.gov/retire/estimator.html
Note that even the Social Security Administration cautions “…benefit amounts may change because, by 2033, the payroll taxes collected will be enough to pay only about 77 cents for each dollar of scheduled benefits.”
Insuring you (or your spouse) won’t outlive your nest egg.
People don’t always think of it this way, but Social Security is essentially a “life annuity.”
- For those who make qualifying payments into the system, Social Security provides an agreement to pay recipients a specified income, after a certain age, for as long as they live.
- This is essentially the same promise a private insurance company makes when it enters into a life annuity contract.
- Differing from Social Security, private annuities can be structured so you, your spouse, or your beneficiaries can at least get your original principal back.
- With Social Security, other than for survivor benefits, when you die, the money you contributed during your lifetime is gone.
One way individuals without traditional pensions can add guaranteed income in retirement years is allocate a portion of their low-risk assets to a private annuity.* Doing so can both supplement retirement income and relieve uncertainty about running out of funds. In principle, annuities are not investment “securities.” They are contracts and a form of insurance. This is why they must be purchased from a licensed insurance agent.
How much extra retirement income could an annuity provide you during retirement?
To request a no-obligation quote and learn more about whether annuities may be suitable for your situation, contact our agency at this link.
*View our annuity disclaimer at this link. Income guarantees in annuities are based on the ability of insurers to meet their contractual obligations. For some individuals and circumstances – such as those who have a short term need to access their principal, annuities may not be the best option. Always read any proposed annuity contract carefully and be sure all of your questions are clearly answered before making a purchase.