Preparing for Retirement Longevity With Guaranteed Lifetime Income

Updated: September 28, 2022

No matter what your desired retirement lifestyle is, it’s important to have reliable and steady income for retirement, no matter how long it lasts. With the average retirement now stretching over two decades,¹ it’s a good idea to prepare for rising health care costs and other essential and discretionary expenses.

Due to costs associated with living longer, the rise of inflation, and the unpredictability of the stock market, many people are considering guaranteed income sources like an annuity that offer the benefit of regular payments in retirement. An annuity can provide you with income that you can’t outlive as well as benefits like some protection from market volatility and a death benefit for beneficiaries should you pass away.

The Need for Lifetime Income

 

As life expectancies have increased, the financial impact of longevity has made guaranteed lifetime income an important consideration for retirees who want to secure their financial future.

Part of a Balanced Retirement Income Solution

 

Many investors use annuities as a way to supplement other sources of retirement income, such as Social Security or their savings.

The average purchase age for all annuities (excluding fixed immediate annuities) is from ages 59 to 65. These are baby boomers near or in retirement.⁵ On average, guaranteed lifetime income annuities provide $8,700 to $10,700 annually in supplemental retirement income.⁵

Annuities on the Rise

 

Statistics show that people near or at retirement age who have a deeper understanding of annuities also have a higher interest in purchasing them.

Retired annuity owners have invested around 25% of their investable assets in annuities.⁶ Among the most purchased annuities in 2021 were fixed-index annuities, which offer purchasers a chance to grow their purchase payment by participating in market growth while – providing protection against market downturns.

Whether you’re already retired or it’s still a few years away, it may be a good idea to consider what sources of guaranteed income you have in your portfolio today. With an immediate annuity, you can start receiving a steady stream of income now, while a deferred annuity offers the benefit of predictable, guaranteed income in the future.

One type of annuity that is becoming more popular is an index-linked annuity with an income rider. These annuities are linked to a choice of market indices that can provide growth opportunities for people nearing or in retirement while providing a level of protection against volatile markets. They also offer an additional stream of guaranteed lifetime income, which can help people meet the expenses of a long retirement.

Satisfaction and Confidence

 

Over 70% of retiree households with an annuity are more likely to achieve the retirement lifestyle they desire. Even if retirees live to age 90, they’re also more confident that they won’t run out of savings.⁵ Some people who own annuities with guaranteed lifetime income list the following benefits:⁸

Overall, it’s been shown that retirees who own an annuity are more confident that their savings and investments will last through their retirement.⁴