Well, if you're 65 years old and have $100,000, that's what you can get with a single premium immediate pay annuity as discussed in this previous post. Experts now are debating whether this should be a standard option for individuals leaving a company.
In my view, it is an option that should be understood by every retiree. The number 1 fear of seniors, as shown in poll after poll, is running out of money; and, of course, a single premium immediate pay annuity is a way to eliminate this fear.
As it stands now, retirees can buy them on their own. They just need an education in the pros and cons of the product. This is what companies should provide. This is low cost and doesn't put the company in a fiduciary straight jacket. In fact, retired benefit specialists would probably do pro bono work to produce a national fact sheet that tells retirees exactly what they need to know and update a list of low cost, fiscally sound companies such as TIAA/CREF/Metropolitan Life etc. that retirees can go to.
Do you think this is a viable approach?
The only concern is if the insurance company survives or if it declares bankruptcy before you die.
ReplyDeletere: Mycroft Bankruptcy is a valid concern. Be sure to check state laws for protection. States have guaranty funds to protect you up to a limit.
ReplyDeleteGood reference:
http://www.insure.com/articles/generalinsurance/bankrupt-company.html
I suggest starting at Vanguard if you are considering simple premium immediate pay annuities. Their site has great information. TIAA/CREF is also a great source and a great place to buy an annuity.
The problem with any fixed rate of return investments is that inflation can eat away the purchasing power. 600 bucks 10 to 15 years will buy a lot less than it does today.
ReplyDeleteTrue. Get the inflation rider.
ReplyDelete