The New Retirement Environment, part 5 of 5 taken from the entire episode of Right on the Money, Conservative Investors and Savers.
Synopsis For most Americans, Social Security is the primary resource of retirement funding. From 1975 to 2009, Social Security recipients received a cost of living adjustment. But for the first time in its history, no cost of living adjustment was declared in 2010 and 2011, and again in 2016.
In tough times, retirement portfolios can have difficulty generating sufficient income to fund the basic lifestyle of seniors, much less generating an increase to cover rising costs of retirement. The need for retirement income is so overwhelming, it may alter financial planning as we know it.
Content A new trend among baby boomers is waiting until age 70 to maximize their Social Security benefits and take their required minimum distributions at age 70½. Working an additional four to five years can improve your ultimate retirement income. Even after age 70, some will be living a hybrid retirement; working part time and receiving their retirement benefits. For those who can afford to delay their required minimum distributions, the strategic use of Qualified Longevity Annuity Contracts (QLACs) can defer payments to age 85.
In the old retirement paradigm, you wouldn’t defer income to age 85 because your life expectancy wasn’t that long. But with medical advancements, proper diet and ongoing exercise, life expectancy is predicted to increase well into your 90s.
Longer life expectancy is now the real X factor in retirement and puts enormous pressure on portfolio performance.
For most Americans, the retirement environment may change from accumulating assets to purchasing blocks of guaranteed income. One purchasing strategy for purchasing blocks is buying several deferred income annuities and staggering the distribution start dates, i.e., starting one block of income at age 70, another at age 75 and another at age 80. In this example, at age 80, you’re receiving income from all three deferred annuity contracts, just when you need them most. Because the real cost of retirement is medical and long-term care in your 80s.
Deferred income annuities—similar to single premium immediate annuities—can provide guaranteed lifetime income you can’t outlive. Watch the interview with financial advisor and author Eric Judy taken from the talk show, Right on the Money. Eric explains some of the annuity options available for retirees to consider. Eric has also co-authored The New Retirement, a Paradigm Shift.
1 Deferred Income Annuities are not insured by the FDIC or any government agency. It’s important to have your financial advisor review the balance sheet and ratings of the insurance company before you purchase an annuity.
Syndicated financial columnist and talk show Steve Savant interviews Eric Judy, financial adviser, best selling author and top online video blogger on Right on the Money Part 5 of 5 taken from the entire episode entitled Conservative Investors and Savers.