In the past, retirees were oftentimes rewarded for their years of service to an employer with a gold watch and a lifetime pension income. This, coupled with Social Security benefits, typically covered expenses for the remainder of their lifetimes.
But fast forward to today when traditional pensions have all but disappeared and retirees are relying more on what they themselves have accumulated in order to pay expenses and make ends meet.
Those who have a viable cash flow plan in place are not only paying their basic living expenses, though. They are also finding something interesting with regard to not just financial, but also physical and emotional benefits that are associated with guaranteed retirement income.
The Many (Sometimes Unexpected) Benefits of Lifetime Income in Retirement
It has often been said that money can’t buy happiness. But in some cases, it actually can! According to a 2018 Guaranteed Lifetime Income Study by Greenwald & Associates and CANNEX, it was determined that the greatest benefits of having a guaranteed lifetime retirement income included:
- Peace of mind
- Better ability to budget for expenses
- Strategy for diversifying a portfolio
- Way to maintain lifestyle in retirement
- Longevity protection (i.e., not having to worry about outliving income – regardless of how long it was needed)
Due in large part to the reduced stress of not having to worry about stock market fluctuations and falling interest rates negatively impacting incoming cash flow, retirees with guaranteed income had less stress, which in turn, led to happiness and better physical health.
For instance, worry often leads to certain types of serious health issues, such as high blood pressure and heart disease. So, by taking this concern out of the equation, lifetime income recipients were more likely to be healthier.
In addition, without the concern that living expenses won’t be paid, these individuals could also focus their time and attention on other, more important things, such as spending time with loved ones, volunteering at a favorite charity, or simply relaxing.
But with so few employers now offering defined benefit pensions, how can you create your own guaranteed lifetime income stream?
One way is with an annuity.
Annuities are designed for paying out income on a regular basis – such as every month for 10 or 20 years – or even for the remainder of the annuitant’s (i.e., the income recipient’s) life, regardless of how long that may be. This is why annuities are often referred to as “personal pension plans.”
Is an Annuity Right for You?
There are many different types of annuities available in the marketplace, and not all of them are exactly the same. So, it is important that you first discuss your specific short and long-term objectives with an experienced retirement income planner before you move forward with purchasing one.
If you would like to schedule a time to talk with an income specialist, feel free to contact us at Annuity Gator. Our mission is to provide annuity and lifetime income education to investors and retirees, as well as to financial advisors so that more people understand how it works, and how they can make it work based on their own unique and personal circumstances.