A major financial publication recently ran an article about a 67 year old who had retired and purchased a variable annuity to fund his retirement income. He was feeling very comfortable, despite recent market declines and volatility, because he had a Guaranteed Income Benefit as a part of the annuity he purchased.  This benefit was providing him with an income of 6% per year and would increase to react to inflation.We are pleased to say that we have many clients who are in similar situations and take great comfort in knowing that they are not going to find themselves in the same difficult straits as so many other retirees and soon to be retirees. Guaranteed income benefits provide a guaranteed lifetime income or pension, for one or more lives.  These unique financial products also have death benefits that can extend income to later generations.
 
A nest egg of $1,000,000 used to be sufficient to provide an annual income of $50-$60,000, today that same amount of money would generate between $5-$10,000 a year, no enough to live on. The Federal Reserve has announced that interest rates will remain as low as they are for the foreseeable future. Actuaries, the people who design annuities, understand how to design products that can provide a guaranteed income and a substantial death benefit, so, this is not the case of something that is "too good to be true".
 
For younger people, who have the time to let assets grow before taking income, the results are even more enticing. A 50 year old can deposit money and his income benefit will grow by 8%/year until retirement.  At age 65, he can begin to draw lifetime income from a fund that is now worth 3.2 times the amount he originally deposited. He can enjoy this income at a rate of 5-6% for the rest of his life and his spouses. All the while, this investment is tax deferred and can increase, but never decline.
 
There is nothing more rewarding to an advisor than to see clients who are able to weather difficult times in comfort.  We can provide specific examples for readers of this powerful benefit.  Please contact us at anadolna@associatesgroupinc.com