1. (NU) - Ten thousand Ameri-
cans a day are turning 65, includ-
ing a couple we’ll call Stu and He-
len. In excellent health, Stu and
Helen could be facing a retirement
of 30 years -- or even longer. One
of their biggest fears about their
impending retirement is their po-
tential longevity -- and running
out of money to not only pay their
bills, but enjoy their free time.
Stu and Helen participated in
their companies’ 401(k) plans.
Like many workers, neither has a
traditional pension, so they are
solely responsible for their own
retirement security.
Fortunately, couples like Stu
and Helen have options for cre-
ating a “personal pension.” By
using some of their savings to
purchase an annuity, they can
guarantee a steady stream of in-
come for life.
With an immediate annuity,
they can make a lump-sum pay-
ment to a life insurance company,
and the company will send them
their choice of monthly, quarter-
ly or annual payments. They can
choose to receive the income pay-
ments over a specified number of
years or as a guaranteed stream of
income they can never outlive.
They could also consider pur-
chasing a deferred annuity, which
allows savings to grow tax-de-
ferred during an accumulation
phase until they decide when pay-
outs begin. People who are years
away from retirement -- or who
are retired but don’t need income
right away -- might choose this
type of annuity.
With a deferred annuity they
decide how their money grows
during the accumulation phase.A
fixed annuity earns interest at a
guaranteed rate. An index annu-
ity is tied to a market index like
the S&P 500 stock price index. In
a variable annuity, savings are
placed in subaccounts that are in-
vested in stocks and bonds.
Another option is a special type
of deferred annuity, often called
longevity insurance, which will
provide them with a guaranteed
stream of income once they reach
a certain age, usually around 85.
Surveys show that 90 percent
of annuity owners think annuities
are an effective way to save for
retirement. And annuities are
among the most regulated finan-
cial products in the marketplace.
From product development to ad-
vertising to sales, life insurers
must comply with state and fed-
eral laws and rules that help pre-
vent fraud and protect con-
sumers. In addition, most states
provide a “free look” period al-
lowing customers to return an-
nuities to the insurance company
for a full or partial refund.
Planning for retirement can be
stressful. But for retirees like Stu
and Helen, the guaranteed in-
come from annuities can provide
peace-of-mind for a lifetime.
For more information on
annuities, visit www.acli.com.
How to Secure Income
for Retirement
MONEY
NewsUSA
A “personal pension” could
guarantee a steady stream
of income for life.
NewsUSA