The concept of Comprehensive Wealth Management encompasses the investor’s entire financial picture in order to make investment decisions predicated upon current or future needs. We have found that in working with our clients one of the primary goals, and least understood, is Retirement Income Planning. In other words, how much do I currently have invested, when do I plan on retiring, and what is an income amount in retirement that will provide me (and my spouse if applicable) with a quality of life equal to or better than my current level?
One of the many tools available in the marketplace today to generate current and/or future income is annuities. An often misunderstood investment vehicle, the annuities of today can create a form of pension income for investors without the need to annuitize or, in other words, give up control of the asset in exchange for income. These forms of private pension plans, also known as Living Benefits provide a 5.0% increase in the income base each year, if no withdrawals are taken in the first ten years of the contract. These plans will pay out, at a future date, income that can never be outlived. For example, recently a $100,000 investment made at age 55 could in ten years achieve an income base of $ $162,889 which pays out 6.25% for life (single life) beginning at age 65. That’s $10,181.00 a year no matter how long you live! Please note there are no guarantees attributed to the actual account value, only the income base which is payable as a percentage on a monthly, quarterly or annual basis.
Know the Landscape
For many investors, having a 10-20% of their portfolio in a guaranteed annuity makes sense, especially if they plan on self-insuring their retirement through their accumulated net worth. Please call Karl Wagner if you are interested in developing a retirement income analysis and/or want to learn more about the competitive annuity landscape. We are also available to review any annuities you may currently own elsewhere.
Source: Lincoln Financial Group