For those who are willing to give up liquidity to maximize guaranteed income for life, the solution has always been relatively straightforward: purchase a lifetime Single Premium Immediate Annuity (SPIA).
However, in recent years, annuity companies have begin to offer Deferred Income Annuity (DIA) contracts, also known as longevity annuities, which similarly provide guaranteed income for life but an income stream that doesn’t start for years or decades into the future (i.e., the income is deferred).
The downside of the DIA approach is that the retiree still has to fill the income gap between now and when the DIA starts; the upside is that it requires far less of an investment into the DIA to get what ultimately is still income for life, because of both the years that income won’t be paid, and the opportunity to accrue both interest and mortality credits during the waiting period.
Yet with more choices now between SPIAs and DIAs – not to mention whether to include features like inflation-adjustment and death benefit riders – it becomes difficult to determine what is the “best” allocation among such contracts.
Blanchett analyzes the issue looking at various:
- equity allocations (for the non-annuity portion)
- the portion of income attributable to Social Security
- the withdrawal rate, the inflation and return environment
- the risk aversion of the retiree
- the desire for leaving an inheritance behind
- adjustments for anticipated life expectancy
The overall conclusion of the results is that nominal SPIAs are often most favorable, although it would only take a small increase in payout rates from DIAs to make them dominant in most situations, suggesting that if pricing for DIAs gets just a little more “competitive” (i.e., payouts improve as more companies offer such contracts and compete for retiree dollars) they may soon deserve far more consideration as a client solution.
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For annuity products, call Connie Dello Buono CA Life Lic 0G60621
408-854-1883 motherhealth@gmail.com in 50 US states
Published by connie dello buono
Connie Dello Buono is based in Sunnyvale California. Her first ebook is about women's health, Birthing Ways Healing Ways and her recent one is about cancer prevention, Curated Healing Ways. She had helped women have holistic childbirth as childbirth educator, founded Motherhealth, to serve seniors in the bay area with holistic caregivers and blogs at www.clubalthea.com with more than 10,000 health and finance related posts.
Connie trains her own caregivers, which are the favorites of most bay area seniors who are home bound and alone.
She is active in the rehab and nursing facilities, volunteering on music and movement for seniors.
She is a member of Lion's club and offered scholarships to students in the Philippines.
She is active at churchinsunnyvale.us and has Fridays Bible home study in Sunnyvale using the recovery version of the Bible , free at biblesforamerica.us
She loves dancing and teaching and her courses can be found at
https://teachclub.com/@thriveafter60
She is California Life Insurance licensed providing life insurance for older adults with health issues and helping women retire safely with income for life.
at menloassetca.com , she helps with 401k rollover.
3 Benefit plans
- Mortgage protection using term life insurance to pay for mortgage balance in event of death
- Final Expense plan using Single Issue Whole Life Insurance, with cash back, disability benefit and guaranteed in the presence of health issues
- Fixed Index Annuity retirement plan for safe, accessibility, less fees, less taxes, avoids probate as it goes directly to beneficiaries, rate of return with no downside market participation.
She brings compassion and understanding to the needs of her clients, bringing holistic approach in health and life insurance. Her goal is to free families from worries especially during covid with caregivers and life insurance in the presence of health issues, especially for women.
She can be reached at 408-854-1883 , motherhealth@gmail.com
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