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What Is a Lifetime Income Stream?

Stan Haithcock
June 19, 2023
What Is a Lifetime Income Stream?

Hey, Stan The Annuity Man here, America's annuity agent. The question that you are asking that everyone is asking Stan The Annuity Man is, what is a lifetime income stream? Loaded question depending on who you ask, but a lifetime income stream revolves around the annuity category. We will go deeper into that, how it might work for you, how it might not, and other lifetime income streams you're getting and how to compare them to annuities.

Lifetime Income Stream Basics

So, what is a lifetime income stream? It's an income stream that you can never outlive. What does that encompass? If you have a pension from your employer, consider yourself fortunate because less than 10% of the people in the United States have a pension from their employer that pays a lifetime income stream. And that keeps going down unless you're working for the government, then there's a pension there. Social Security is a lifetime income stream you can never outlive, and people love that. I always tell people Social Security is the best inflation annuity on the planet because you get these increases. But it has nothing to do with life expectancy, and it has to do with votes because the guys in DC, the guys in gals in DC, they say, "Well, we need to do something for the voters," so they just raise it up. Anytime you do that with an annuity company, in other words, if you attach an inflation increase, they lower the payments.

What's The ROI?

Most people who don't have pension plans create a lifetime income stream that they can never outlive. They do this by buying an annuity. Annuities are the only product category on the planet that provides that lifetime income stream. There's no ROI until you die and no return on investment calculation until you die. Because if you live for 100 to 150, the annuity companies are on the hook to pay. That's the value proposition.

So, people always ask, "What's the return?" I don't know that until you die. You should be going into looking for lifetime income guarantees for you or you and your family or you and your spouse under the assumption that this is money that's going to hit the account every single month regardless: regardless of market conditions, regardless of economic situations, regardless of world events. Regardless, this money is coming in. That's the lifetime income guarantee.

Structuring It

How do you structure it? It's up to you. Annuities are customizable. At the time you start getting quotes, and when you get the contract, you can customize that contract to do exactly what you want it to do. Let me give you some examples. You can set it up as single life, joint life with you and your spouse, joint life with you and somebody else, or joint life with you and a kid, for example.

Great story. I had a client recently that has a nine-year-old and a 12-year-old, and he's buying joint life annuities with his wife and the kids, meaning that there's a lifetime income stream starting, they're Immediate Annuities, they're starting now, but the primary pricing mechanism is life expectancy. So, the primary life expectancy that's being used is the little kids. Those kids, nine and 12, are starting to get payments. Of course, their mom's getting the payments, but that kid will get that payment for the rest of their life, which is a pretty cool legacy.

But the bottom line is this, with annuities, it's customizable. Just ask yourself two questions. What do you want the money to contractually do? And when do you want those contractual guarantees to start? Also, understand that the evil annuity company doesn't keep the money when you die unless you want to set that up life only. That's what life only structure means. It means that when your Learjet hits the mountain, money goes poof. But most people, 99% of Stan The Annuity Man clients, set it up to where if there's a lifetime income guarantee, it's going to pay you for the rest of your life, and if it's joint life, it's going to pay for both lives regardless of how long either of you live. But when your Learjet hits the mountain, all the money left in the account goes in full to the listed beneficiaries of the policy. It's pretty cool because you're transferring the risk to the annuity company to pay you for the rest of your life, and you're making sure that 100% of the unused money will go to the beneficiaries, and the evil annuity company doesn't keep a penny.

Client Example

A client called me the other day and was talking about the longevity in his family. His mother lived to 95, and his dad was 94 when he died. That's a good deal because life expectancy tables currently have us living into our mid-eighties, and they beat that life expectancy table. So, his question was this: he thinks that lineage will obviously be in his favor, and I think so, too, if everything goes well. His question was, what happens to the money? You're getting a combination of return on principal plus interest with any annuity payment. Whether it's an Immediate Annuity, Deferred Income Annuity, QLAC, Qualified Longevity Annuity Contract, or an Income Rider, it's a combination of return on principal plus interest. So, he was asking, "Hey, Stan, what happens when the money goes to zero in the account?" I'm thinking, "Hey," and here's what I told him. That's good because now you're in their pockets. They, meaning the annuity company, and they are still on the hook to pay. I have thousands of clients whose accounts are at zero, yet they still get the monthly income payments. That's the purest definition of transfer of risk on the planet. That's the benefit proposition only annuities can provide, and there's no ROI until you die because we don't know when you'll die. Still, it doesn't matter what's in the account because the annuity company is on the hook to pay.

When putting these lifetime income guarantee quotes together for however you want and you book a call with us, understand that the annuity company is on the hook to pay. Your only decision is when do you want the income to start and how do you want to structure the money if something happens to you early in the policy. Do you want the money to go poof? Or do you want 100% of any unused money to go to your list of beneficiaries? That's your call, and we'll listen to you.

Again, you can book a call with us, and we'll send you those quotes after quoting all carriers for your specific situation. We'll need dates of birth and things like that, and all will be kept confidential. Lastly, please subscribe to this channel, Stan The Annuity Man YouTube channel because 3 days a week. See you next time.

Never forget to live in reality, not the dream, with annuities and contractual guarantees! You can use our calculators, get all six of my books for free, and most importantly book a call with me so we can discuss what works best for your specific situation.

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