Lifetime Income Annuities May Be Needed
With over 30 years of experience, clients have often said that they do not need a Lifetime Income Annuity. They only want a reasonable rate of return. They may be correct on not needing a Lifetime Income guarantee, but they are often inaccurate and have no clue how much trouble they may be in later.
Some retirees have saved enough money and will never outlive their money, but most people are not in this category. Many people think that because their income and expenses are comfortable now, they will remain that way through their retirement. They do not have the tools or the ability to calculate future numbers that consider inflation.
Many consumers do not have the correct information to understand the proper amount needed to retire. Educating clients on strategies and products will help them reduce or eliminate the eroding factors that may ruin their financial future.
The eroding factors are:
- Market Losses
- Outliving Your Money
How to reduce or eliminate the eroding factors:
- A Fixed Index Annuity product contains a contractual guarantee that principal and interest are protected from market losses yet have a potential double-digit, single-digit, or zero return.
- To potentially keep up with inflation, increasing Lifetime Fixed Index Annuity can be recommended to increase Lifetime Income potential, guaranteeing that the income will never decrease from market losses or declines.
- A Lifetime Income Rider guarantees a payout for life. Even if the contract value goes to zero, the fear of outliving a person’s retirement money is eliminated.
Another critical point to consider is that placing funds in just one Annuity may not solve the whole retirement income need, which may not be the best solution.
Example: It may be wise to place 50% in a Fixed Index Annuity with a Lifetime Level Income (with a guaranteed income amount). This Annuity can cover basic living expenses.
Applying the remaining 50% to an Increasing Lifetime Income Fixed Index Annuity with Increasing Income can help keep up with inflation. This income can increase but never decrease from market losses.
A process that works well is to have the client fill out short Confidential Financial Worksheets and then take those numbers and input them into a software program, which shows a visual picture of how long their money will last through their retirement. Often illustrating that lifetime income may be required.
It is essential for the client to take the time to invest in their financial future. One industry-leading companies research concludes “People spend more time planning a vacation than they do on their financials.” It has been shown that people who take the time to invest in themselves and their financial future through guidance can enjoy their retirement without the worry of outliving their money.