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Redefining retirement: A little of this and a little of that

Income Annuities gain popularity as retirees and pre-retirees look for safety.

Remember when you first started off in your career? Fresh-faced and ready to take on the world, the concept of retiring in the future seemed pretty cut and dry—and distant: Work hard, save, and then retire with your pension plan—supplemented by Social Security. Easy, right?

The landscape of retirement has changed dramatically over the last few decades, however, and with traditional pension plans dwindling, the future of Social Security uncertain, the rising costs of healthcare and now retirement right around the corner, people are rethinking their approach to retirement income.

Consider this: Since 2007, the share of retirees (70% in 2013) indicating that Social Security is a major source of income in retirement has increased steadily. Unfortunately, according to the Social Security Administration, the average monthly benefit in 2013 for retired workers is only $1,218.

Now, think of your monthly expenses, including housing, food, utilities, and healthcare, as well as your retirement goals and dreams. Whether your plan is to finish your master’s degree, hike the Appalachian Trail, start your own business, or perfect your tennis game—you need to ask yourself: Will I have enough money to do it and live comfortably?

A new approach to retirement planning: A little of this and a little of that

For many pre-retirees, their anticipated retirement income may be less reliant on traditional pension plans and Social Security and more on a “pieced together” approach. In fact, 77% of future retirees say they will rely on a combination of Social Security, employment (75%), employer-sponsored retirement savings plans (72%), IRAs (68%), other personal savings (64%), and traditional pension plans (57%) for retirement income.

In addition, income annuities are growing in popularity for those looking to fill the retirement income gap. In fact, according to a 2010 AARP’s report “Older Americans’ Ambivalence Toward Annuities,” nearly five in 10 workers (48%) plan to purchase an annuity, either from a life insurer or through their employer and nearly four in 10 (38%) expect to receive a lifetime income annuity from various sources. The survey also showed that nearly three in four workers (74%) are receiving, or expect to receive, income from an annuity, and six in 10 (63%) are receiving income from a lifetime income annuity currently. Additionally, three in 10 workers and four in 10 retires with a choice of income distribution options intend to choose, or already have chosen, an annuity.

Why? In a nutshell: Income Annuities offer security, peace of mind, and independence, according to the same survey. Just check out what respondents had to say about the benefits of annuities:

  • 82% said they offer peace of mind because the payments will continue as long as you live.
  • 80% felt that annuities can ensure that your monthly income will not fall; even there is a large drop in the market.
  • 76.8% said they can help you remain independent because the money will never run out.

Which income annuity is right for you?

With so many products to choose from, there’s one you might want to consider adding to your retirement income arsenal: The New York Life Guaranteed Future Income Annuity (GFIA)—a flexible premium, deferred income annuity.

How can it help fill your retirement income gap? When you purchase the GFIA product, you make an initial premium and select a future date in which your guaranteed lifetime income will start (2–40 years from the initial premium payment—certain age restrictions may apply). Then, during the deferral period—the time between your initial premium and your income start date—you have the option of making subsequent premium payments at any time (up until 2 years prior to your income start date). (Initial minimum premium payment is $5,000 and minimum subsequent premiums are $100. Additional premium payments will receive the payout rates in effect when premiums are received.)

After your deferral period you’ll begin to receive guaranteed income payments, which will last for the rest of your life—no matter how long and full your life may be. You can customize your payment stream to include another annuitant, legacy options, and inflation protection*.

*Limitations and restrictions may apply. Please ask your agent for more information.

Getting ahead of the game

The Guaranteed Future Income Annuity is unique in that it appeals to pre-retirees between the ages of 55 and 65 who plan to retire in five to ten years - allowing them to look ahead with peace of mind. Matt Grove, our Senior Managing Director of Annuities explains GFIA’s popularity among pre-retirees, “On the whole, it’s people in their mid- to late-50s who are responding to the product because it offers them the ‘retirement income trifecta’: a guaranteed, sustainable way to maintain income in retirement; potentially higher income payments than they could achieve elsewhere; and reduction of some market risk from their overall portfolio during the final years of their pre-retirement, when they can’t afford to endure the consequences of a market downturn.”

He continues, “GFIA allows policyholders to set an income start date in the future, at which time they will begin receiving guaranteed income payments for the rest of their lives. Between the initial premium date and the income start date, they can continue to purchase more future income by making additional premium payments, and can defer or accelerate their income start date as their personal needs change**.”

“Two years ago, deferred income annuities were a $50 million market. Today, the market is $1 billion and growing rapidly. We attribute this growth to the increasing awareness that it is possible to create a more abundant and sustainable retirement by investing in your future before you reach retirement age.”

A flexible, secure, simple retirement solution

Consider this: According to the COUNTRY Financial Security Index® survey, only one third of Americans overall think a middle-income family can save for a secure retirement. Those nearest retirement are most skeptical, with just 28% of 50 to 64 year olds thinking it’s possible. Why the skepticism? Because even despite an earlier start on saving for retirement, these Baby Boomers’ savings were the hardest hit by the economic downturn.

Income annuities can offer them—and you—the security and peace of mind needed to face the future with confidence—and make retirement dreams a reality. And, the flexibility of a Guaranteed Future Income Annuity can help jumpstart a customized retirement income solution.

Don’t have an agent? Simply click on the “Talk to Us” link above, and we’ll have one of our local, professionally trained agents contact you.

**For most jurisdictions, the policy form number for the Guaranteed Future Income Annuity is ICC11-P100 (it may be 211-P100 and state variations may apply).

1 http://www.ebri.org/files/Final-FS.RCS-13.FS_2.Expects.FINAL.pdf, 2013 Retirement Confidence Survey Employee Benefit Research Institute and Mathew Greenwald & Associates.

2 http://www.ssa.gov/policy/docs/quickfacts/stat_snapshot/. As of February, 2013.

3 http://www.ebri.org/files/Final-FS.RCS-13.FS_2.Expects.FINAL.pdf

4 http://www.lifehappens.org/annuities-are-they-right-for-you/

5 http://www.lifehappens.org/annuities-are-they-right-for-you/

6 Issued by New York Life Insurance and Annuity Corporation (NYLIAC) (a Delaware Corporation) a wholly owned subsidiary of New York Life Insurance Company. Available in jurisdictions where approved.

7 Guarantees are subject to contract terms, exclusions and limitations, and the claims-paying ability of NYLIAC. This contract is irrevocable, has no cash surrender value and no withdrawals are permitted prior to the income start date. Income payments are guaranteed at least as long as the annuitant is living, provided the annuitant is alive on the designated income start date. Contracts in which a Life Only payout option is selected do not provide a death benefit either prior to, or after, the designated start date.

8 http://insurancenewsnet.com/article.aspx?id=375799&type=topnews

** The ability to move the income start date is not available for the Life Only option or in CT. The policy owner can accelerate the start of income payments to any date 13 months after the latest premium payment or defer income payments up to five additional years from the original income start date selected. Payout amounts will be adjusted, this can be elected one time.

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