Are you tired of being fed Retirement Income advice with underlying annuity sales pitches? Let us walk you through what to look for to create a retirement plan that works the best for your specific situation.
When you're talking about types of retirement income planning, you're talking about putting together a guaranteed income floor. A guaranteed income stream hits your bank account every single month regardless of whatever is happening in the world.
Now, what comprises that income floor for retirement income planning? One is Social Security. The other type of guaranteed flooring type product is a pension if you're so fortunate to work for the state government or federal government or a perfect trade union. But, unfortunately, less than 10% of private companies still offer a pension.
Also, part of retirement income planning is your required minimum distributions from your IRA, your traditional IRA. When you turn age 72, the IRS is going to tap you on the shoulder and say, “Hey, oh, by the way, we need you to start taking money out and paying taxes on all that money you've been deferring.” So, you have to include RMDs (required minimum distributions) as part of that retirement income planning strategy within the overall income floor.
Retirement planning should include annuities because they are the only product on the planet that provides a lifetime income stream that you can never outlive. It's undisputed. Annuities have a monopoly on guaranteed lifetime income, and there's no return on investment until you die. Up until then, it's a transfer of longevity risk, which when you're doing retirement income planning, that's what you're trying to do. Longevity risk is the fear of outliving your money, so everything within that retirement income plan should be geared toward you never outlive it.
Yes. Social Security is an annuity. Everybody in the United States with a Social Security number owns an annuity. Annuities solve for a lifetime income. It's a transfer of risk that provides a payment that hits your bank account every single month that you can never outlive. In relation, Social Security is a guaranteed lifetime income stream backed by our government that's going to pay you a guaranteed monthly amount that's going to hit your bank account every single month that you can never outlive. Sound familiar? It should because it is the best inflation annuity available.
Now that we've established factually that Social Security is an annuity, the question that you have to answer is, “Do I need extra income? Do I need additional income? Do I have to fill a gap of income in my guaranteed income floor?” That's where the commercial annuities can complement your current Social Security annuity. For example: Let's say you're getting $2,500 a month of Social Security payments, but you need an extra $1,500 a month to fill in an income gap for you and the spouse first, e. I'll get your date of birth, where you live, what type of funds you have available, and when you want the income to start. Then I'll do a reverse-engineered quote, quoting all carriers to find the highest contractual guarantee for your situation and find out which company will require the least amount of money to fill in that $1,500 gap.
Pensions are a lifetime income stream from your employer. They're going to pay you for the rest of your life as long as you live, and you can typically structure it so that you can include a spouse or partner.
In all cases, Social Security, Annuities, or Pensions, the payment is primarily based on your life expectancy when you start the income. So think about it when you're looking at Social Security income, and you're thinking about when to start; if you start when you're younger, the payments are lower. Annuities work the same way.
Annuity income is a combination return of principal and interest which play a secondary role in calculating your payments. There’s no ROI until you die. So you should not look at annuities as investments or like a stock or a bond or a mutual fund. You shouldn't do any type of analysis other than how you want to structure the policy contractually and want the income to start.
That's the analysis; you’re buying the steak, not the sizzle. You're owning the reality, not buying the dream. Annuities are transfer risk products, period, and you need to own them for what they will do, not what they might do.
Now, when's the right time to buy it? Should I buy it? How do I buy it? Those are questions that you and I need to talk about? So book a call with me. I will put my stamp on whatever customized solution we come up with for your specific situation.