"Guaranteed income annuities
(also known as immediate fixed annuities) are becoming increasingly popular as
a result of recent stock market volatility. When you purchase an income
annuity, you give an insurance company a lump sum of money and they send you a
check for a fixed amount every month for as long as you live. Purchasers of
these products no longer see their nest egg fluctuate with the market, and can
count on receiving some income every month for the rest of their lives."
"As opposed to giving a lump
sum to an insurance provider to purchase a guaranteed annuity, a retiree could
use their nest egg to support themselves during the initial years of retirement
while allowing their Social Security benefit to increase."
"Similar to a guaranteed
annuity, Social Security is another source of lifetime guaranteed income.
Additionally, your Social Security benefit rises each year you delay taking
payments. If you take benefits at your full retirement age (66 for most
people), your benefit will be 100% of your PIA (or primary insurance amount).
If benefits are taken at age 62, you will only receive 75% of that PIA and if
benefits are taken at age 70 you will receive 132% of your PIA. Thus, by
delaying benefits, you are increasing the size of your guaranteed monthly
income – essentially accomplishing the same goal that purchasing an immediate
income annuity would serve." Read more Lon Jefferies, MBA,
Independent Financial Planner and Fiduciary
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