Guaranteed Lifetime Income with Annual Increases
Predictable Streams of Income Uncorrelated to Market Volatility
Retirement income plans should have foundational components like guaranteed lifetime income. Social Security benefits generate guaranteed lifetime income. Corporate and government pensions generate guaranteed lifetime income. Deferred Income Annuities (DIAs) and Single Premium Immediate Annuities (SPIAs) generate guaranteed lifetime income. You need guaranteed lifetime income to cover your domestic spending.
Content: Often times, consumers parrot some platitude they read in a publication, hear on the radio or see on TV or the Internet. One that has graced the lips of many an uninformed consumer is, “I hate annuities.” They don’t know why they hate annuities, they were just told to hate annuities and so they do. It’s never recommended to echo someone else’s option without collecting the facts. Investigating the claims of any one financial product or planning strategy is a good due diligence process, otherwise it’s buyer beware.
An income annuity like a DIA or a SPIA (no fees) can generate monthly income just like Social Security benefits, corporate or government pensions. No one in his or her right mind would send his or her Social Security check back to the government because it pays out like an annuity. No would call the human resources department at their previous employer and say, “Don’t mail me my monthly check because it pays out like an annuity.” If an annuity pays a lifetime income you can’t outlive, who would send the annuity check back to the insurance company. Oh, is that the issue? That insurance companies manufacture those annuities? No other financial institution manufactures guaranteed lifetime income you can’t outlive via an annuity. Watch the interview on guaranteed lifetime income with Tom Hegna, popular platform speaker, retirement specialist and best-selling author. Tom has two retirement books entitled Don’t Worry, Retire Happy and Paychecks and Playchecks. Tom has also hosted the PBS Special, “Don’t Worry, Retire Happy.”
DIAs and SPIAs also offer a cost-of-living adjustment uncorrelated to the government’s Consumer Price Index or other inflation gauges. Also, keep in mind DIAs and SPIAs have no fees. You purchase the increase at the rate you decide, generally to exceed 5 percent annually.
Two years ago, the IRS created a new law to delay portions of required minimum distributions (RMDs) in qualified plans called a Qualified Longevity Annuity Contract (QLAC) that uses DIAs exclusively. Under a QLAC, you can defer up to 25 percent of your RMDs from your qualified plans (not to exceed $125,000) from age 70½ until age 85. One last thought: There are studies that show retirees with guaranteed income are happier in retirement. That’s the happy factor for seniors.
Nationally syndicated financial columnist Steve Savant interviews Tom Hegna, popular platform speaker, retirement expert and best selling author. Tom has two retirement books entitled Don’t Worry Retire Happy and Paychecks and Playchecks. Tom has also hosted the PBS Special, Don’t Worry Retire Happy.