| Annuity providers tout guaranteed lifetime income as | | | | providing for contingencies. After all, managed |
| the best way to avoid outliving your life savings. | | | | withdrawal from your retirement fund is permissible. |
| However, that is only a nice marketing phrase. | | | | Even if the withdrawal is catastrophic, it will be worse |
| Guaranteed lifetime income has a high opportunity | | | | if you have only a relatively low guaranteed income |
| cost and allows the annuity provider using your | | | | stream to depend on. |
| money to provide for you. On the other hand, | | | | The majority of retirees do not save enough for |
| retirement savings gives you flexibility and options. | | | | retirement. However, taking your limited savings and |
| Power lies in the ability to choose. Retirement savings | | | | purchasing annuity income may not be the best |
| offers you just that- choice. It is ideal to have a | | | | option. If you take $200,000.00 and purchase |
| healthy accumulated retirement fund and a | | | | guaranteed income of $1,286.00 per month, then you |
| guaranteed income stream. However, if you had to | | | | lock yourself into that arrangement for life. However, |
| sacrifice one for the other, you should emphasize | | | | if you took a portion of that $200,000.00 and |
| retirement savings. The reasons supporting this | | | | invested it wisely, you will have the chance of further |
| choice stem from retirement savings giving you more | | | | growing your retirement fund. With retirees living |
| options. | | | | longer and the cost of living rising, that is a better |
| Retirement savings are preferred to guaranteed | | | | option than being ultra-conservative. |
| lifetime income for at least five reasons: | | | | Guaranteed lifetime income can be either fixed or |
| 1) You can use savings for other reliable sources of | | | | fluctuating. Fixed annuity payments- especially those |
| income | | | | that are not sufficient- cannot withstand depreciation |
| 2) Savings provide a buffer for contingent expenses | | | | as well as retirement savings. This is because you |
| 3) Accumulation potential | | | | have power over your retirement savings that you |
| 4) Guaranteed lifetime income depreciates faster | | | | do not have over guaranteed lifetime income. |
| over time | | | | Retirees have full ownership of retirement savings. |
| 5) You have full ownership of your retirement fund | | | | You can picture giving up that $200,000.00 to get |
| A healthy retirement fund can generate a stream of | | | | monthly guaranteed payments of $1,594.00. Imagine |
| reliable income. The guaranteed lifetime income | | | | that instead of sacrificing your 200K, you invested it |
| provided by annuities (immediate annuities in | | | | at 6% per annum while retaining full ownership. You |
| particular) is not the only way. You can invest in | | | | would actually receive a monthly return of $973.00. It |
| income and growth options to produce a steady | | | | is less than $1,594.00, but you still own your 200K! In |
| stream of reliable income. The guarantees on other | | | | any event, you can always invest your own money |
| income plans are not contractual obligations, yet | | | | at higher returns. |
| income options are typically stable and safe. | | | | Ideally, you should have an optimal mix of savings |
| Therefore, you can put retirement savings to work | | | | and income. However, guaranteed income outside of |
| for you- action that can compensate for absent | | | | company pensions or state benefits may be |
| guaranteed income. | | | | superfluous. Purchasing immediate annuities have |
| Guaranteed lifetime income is a cash flow enhancer | | | | attendant risks. Retirees and pre-retirees must |
| but it sacrifices your cash asset. Once you need cash | | | | consider whether it is best to sacrifice savings for |
| on demand, having limited savings can put you under | | | | the promise of guaranteed lifetime income. |
| stress. Retirement savings will give you the option of | | | | |