Annuities: Retirement Vehicle Of The New Economy
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During these difficult economic times many of us are being forced to “retire” on anemic pension incomes or lump sum payouts that may buy survival but nothing close to the retirement we dreamt about. Although the prospects for a better economy are lean, there are ways each of us can improve our situation through annuities.
Even as late as 2008, annuities were viewed as a retirement option reserved for widows and naïve investors. Now, in an economy that has yet to find its second wind, annuities are looking more like sustainable retirement vehicles than the Cadillac pension plans of the latter 20th Century. What has caused this change in perception?
As these Cadillac pension pools evaporate in economic crises, many voting retirees have had to suffer through the new economy. In turn, savvy politicians are aligning with those seeking regulations that would enhance annuities and terminate tax breaks that favor Wall Street.
Long on Life Short on Money
Current actuarial stats indicate that every year lived beyond the age of 60 increases the chance of living to 90 and beyond. With the Boomer Generation now pushing 60, we have the prospect of millions of very elderly people trying to live on Market-weakened retirement portfolios competing for benefits with an equally stressed pool of their mid-aged caregivers. When financial markets rise and fall, annuities and sustainable annuity rates appear to be the only vehicle capable of carrying both generations across this great divide caused by longer life and weaker income streams flowing out of Wall Street.
Annuity Rates and Government Subsidies
Without some sort of Government subsidy, annuities will be a hard sell. The top annuity rates of today look an awful lot like the lowest annuity rates of a few years ago. The price for receiving a comfortable and sustainable retirement income may be handing some control of our retirement nest egg over to the Government. And as is the case with Social Security, we will not be able to will leftover assets to our heirs. But the alternative would be to run out of money and require financial support just when our children are trying to build their retirement next egg without Social Security benefits or a sustainable income stream from Wall Street. That would be the economic storm of the 21st Century.
With These Annuities You Won’t Impoverish Your Heirs
Still, even without Government support or nudging, many companies manage to offer good annuity rates, with payouts that can sustain payees to age 100 and be coupled with Final Expense Insurance. Although this may not leave heirs wealthy, it won’t impoverish them either.
The best annuity rates are for low-cost single-premium income annuities that are guaranteed for life. Used strategically, they can fill the gap between income provided by Social Security and Investment Assets.