“Retirement Income” might be the two most important words to the 10,000+ baby boomers that reach retirement age every single day. For the people that plan to retire soon or in the future, Retirement Income is a focus and the ultimate goal for most hard-working Americans.
So, what does Retirement Income really mean? In a word, it means lifestyle. When you end your career and transition to the next stage of life, you want to make sure that there are enough guaranteed income streams and income sources in place to ensure the lifestyle you have worked so hard to achieve. Retirement Income is not supposed to be just your Social Security income payments. Those Social Security benefits were never supposed to be the only part of your guaranteed income floor.
What most people are not aware of is that Social Security is an annuity. In fact, it is the best inflation annuity on the planet. It is a pension plan for all U.S. Citizens. No one ever cares about the rate of return of their Social Security payments, the only concern is that this long-term lifetime income stream has hit the bank account.
Annuities were first introduced in the Roman Times as a lifetime income guarantee for the dutiful Roman soldiers and their families. Annuities have been sold in the United States for hundreds of years and are the only financial product that guarantees a lifetime income stream. Annuities have a monopoly on lifetime income. All annuity income is primarily based on your life expectancy at the time income starts. Interest rates play a secondary role. With lifetime income guarantees, there is no ROI (Return on Investment) until you die. Up until that point, it is a pure transfer of risk.
For that sole reason, annuity transfer-of-risk contracts have to be a primary source of retirement income or pre-retirement income. When you save for retirement, add to a savings account, or contribute to a retirement account, the end game is making sure you have enough money to live comfortably. Annuities that are designed for lifetime income can be customized to fit your specific needs and goals. Single Premium Immediate Annuities (SPIAs), Deferred Income Annuities (DIAs), Qualified Longevity Annuity Contracts (QLACs), and Income Riders (attached to some deferred annuities) all can provide a personal pension type income guarantee.
Annuities can be used in Traditional IRAs, Roth IRAs, and non-IRA accounts. The contractual guarantees are the same, the only difference is how the annuity income or withdrawals are taxed. Regardless of the annuity type, you should own them for the contractual guarantees only. Never be swayed by financial advisors to purchase annuities for hypothetical, theoretical, back-tested, non-guaranteed, hopeful agent return scenarios. Always own an annuity for what it WILL DO (i.e. contractual guarantees), not what it might do. Do not buy the dream, because you will own the contractual realities.
It is important to understand that annuities (regardless of type) are commodity products. What that means is that you need to shop all carriers for the highest contractual guarantees for your specific situation. In order to do that, you need to find the best retirement calculator that can shop for the best retirement income guarantees available. Just like buying a plane ticket, you punch in your personal details to find the best annuity contractual deal.
Our goal at The Annuity Man is to shop all carriers to find those top contractual guarantees available. We have developed numerous proprietary calculators and live contractual feeds. All of these annuity calculators are free to use at www.TheAnnuityMan.com. Below are what you can find on our website.
Single Premium Immediate Annuities (SPIAs) are for guaranteed income streams starting as soon as 30 days from the contract issue date to as far out as a one-year deferral. All SPIA carriers are quoted to find the highest contractual guarantees for your specific situation.
Deferred Income Annuities (DIAs) are SPIAs but with different start dates. DIAs can start as soon as 13 months from the contract issue date to as far out as 30 to 40 years (depending on the carrier). All DIA carriers are quoted to find the highest contractual guarantees for your specific situation.
Qualified Longevity Annuity Contracts (QLACs) can only be used in Traditional IRAs and some employer-sponsored plans. Income can start as soon as age 72 and can be deferred as long as age 85. All QLAC carriers are quoted to find the highest contractual guarantees for your specific situation.
Multi-Year Guarantee Annuities (MYGAs) are the annuity industry’s version of a CD (Certificate of Deposit). MYGAs (aka fixed-rate annuities) are listed on our live feed based upon your state of residence and the specific duration of the contract.
Income Riders are attached benefits to some deferred annuities that provide a lifetime income guarantee starting at a future date of your choice. All Income Riders attached to fixed annuities are quoted to find the highest contractual guarantees for your specific situation and is part of our “Income Later” quotes showing both DIAs (Deferred Income Annuities) and Income Riders.