Do you remember as a child attending the local county fair and having your future read by “Madam” Zowee? I remember those days well, my first time I was about 8, and I was told I would grow up to play baseball for the New York Yankees! For a kid my age that was a huge thing to look forward to. As the realities of life set in, you soon realize that just making the high school team might be a reach.
Reality comes with all aspect of life and for those of us at that certain age, retirement reality can be a hard lesson to learn. We are constantly bombarded by so many options when it comes to investing, should we buy stocks? Bonds? Should we keep our money safe in the bank? What should we do and when should we do it? If Madam Zowee were here today, she would look at my fortune and guess, guess just like the rest. Those that suggest stocks as an investment are doing just that guessing. Maybe they guess with more information than I have but it is still a guess. How would I handle a stock investment if the market took a drop downside just when I wished to retire?
One thing is for sure, income is what we all want, income that is always there. Income we cannot outlive. Income that will never stop or disappoint us. We fortunately have a wonderful option to select for our retirement, an option that has only benefits and no risks, an option that doesn’t cost an arm and a leg, an option that provides us with what we need the rest of our lives. That option is income, and it comes in the form of a fabulous new product evolution called: Income Riders.
An income rider is an addition to a fixed annuity, it sits on top of the annuity and provides additional benefits for the annuitant, and an income rider enhances the annuity. Income riders are innovative, dynamic and evolving. It provides benefits that can help anyone retired or wishing to be by eliminating the one thing we all fear: risk.
Here are some of the benefits an income rider provides:
An Alternative: For years the standard in retirement planning was called the 4% solution. The 4% solution suggested that it would be reasonable to remove 4% per annum from a retirement account. It also suggested that the account would replenish itself quickly being able to earn that level of return. Recently industry experts downgraded the 4% to 2.8% which mean the retiree must take a reduction in retirement income. With an income rider, there is NEVER any reduction in income regardless of what is happening in the world.
Longevity: A recent report suggested that the greatest fear of those retired or planning to retire is running out of money. Dying before your money dies, to put it bluntly. An income rider is a solid plan to calculate exactly how much money is available for retirement and to make sure that your income account doesn’t die before you do. Once you select an income rider to provide your income, you are guaranteed to NEVER run out of money even if you far outlive your actual money, an income rider is forever.
Innovation: It was once said, “Innovation is the mother of necessity.” Nothing could describe the innovation of the income rider that necessity. Income that cannot be outlived and YET was still was still flexible, and still adjustable. The first income riders were designed to help with other sources of revenue, a supplemental source. As evolution grabbed hold of these products, they zoomed in features and benefits and soon the word supplemental morphed into the mainstream.
Gap Protection: Income riders are very adjustable; they can change as situations change. Here is an example: A couple wishing to retire but with an age difference. One partner qualifies for social security, and the other isn’t old enough yet. An income rider can be used to bridge the time difference until both qualify and then it can stop and be used at any time later in life. During the hibernation period, the amount of available income will increase and help offset inflation when it is accessed the second time.
Contractually Guaranteed Growth: An income rider added to a fixed annuity is guaranteed to grow, year after year. The annuitant knows in advance how much is guaranteed to be in the income rider side of the annuity. Many products will guarantee 6% (or more) year after year. Many income riders allow for compounding of this guaranteed interest which can increase future income when it is finally used. The interest credited to the income rider is contractually guaranteed, the annuitant knows exactly how much is in the account and will be in the account at any future date….in advance. The amount is fully guaranteed in writing the day the annuity is issued. This guarantee allows the annuitant to optimize future income options.
Constant Changes: Income riders are active with changes, every few weeks a new benefit is added to the category. This allows the annuitant to select the level of benefit needed to meet goals. Enhancements are creative and with new features being added such as access to the funds for a nursing home need or adding a life insurance benefit to replenish any funds used for the heirs.
Flexibility: A fixed annuity with an income rider can be an unbelievable combination, creating a flexible and adjustable retirement planning tool. Revenue generated from income riders can be started, stopped and started again based on the needs and future change in requirements in the future.
Customization: The fun of buying a new care is selecting the colors, the model, and the accessories. While a fixed annuity is not quite as much fun, it is still fully customizable. Income riders, enhanced death benefits, access to funds, nursing home benefits are just some of the options available to annuity owners. Income riders are also fully customizable; they can be stopped and started based on the needs of the annuitant such as an unplanned or unpredictable situation.
Sleep Insurance: With the invention of the C-PAP machine millions of people began to sleep better at night. It was certainly an innovation based on the needs of many. Fixed annuities with income riders are also a way to sleep better, better because the stress of worrying about money and outliving your income is put to “sleep.” People are living longer and the time spent in retirement is becoming greater. Income riders offer a guaranteed paycheck for life, an amount a client can count on each year for the rest of their lives. Knowing that your income can never be outlived, try some sleep insurance.