GMR 161: How Annuities Fit Into Your Retirement Strategy

Having investments that generate the proper amount of income in retirement is important. The types of investments you have available and your specific needs should be considered when making these choices. In today’s episode, we discuss how annuities, as well as other investment products, fit into the overall strategy of retirement planning.

Show Notes

How much should I be planning for retirement?

• The Income Replacement Ratio

  • $45,000 in expenses (2 people 65 or older)

  • $4,000 in expenses

  • $2,500 in Social Security

  • Gap $1,500 has to come from other sources

    • Real estate, stock/bonds/mutual/funds, annuities, etc.

America’s Income Challenge

• Only 30% of people have a plan.

• From $4,000 a month, $1,000 a month needed for utilities, food, and property insurance could be covered by annuities.

• Most Americans will spend similarly in retirement as they did while working.

The Three-Legged Stool of Fulfilling-Stage Savings

• Government benefits

  • Social Security

• Corporate benefits

  • Pensions

  • 401(k)

• Private benefits

  • Savings

  • Real Estate

  • Annuities

History of Annuity Products

• People view annuities as an investment instead of looking at them as an insurance product.

• Fees were high in the past. Today’s annuities are different, from low to no fees.

• Disclosure - People were taken advantage of in the past. The new legislature has changed that.

• JD Powers rating of annuities.

• Today’s annuities are useful for guaranteed income.

Who should buy annuities?

• Typical annuity buyer is age 50 and older.

•  Have $100,000 or more in assets.

• Purchase an $80,000 to $120,000 annuity to generate income in retirement.

• Although older people buy annuities, everyone should consider if these are good products to cover some of their retirement needs.

The two options for buying annuities

• Single premium - lump-sum purchase ($80,000).

• Flexible premiums - monthly contribution ($500 down and $200 per month)

Resources

Harry N. Stout Website - www.financialverse.com
Today’s Annuity Products: A Tool to Create Protected Lifetime Income
Financial Verse Books by Harry N. Stout
Budgeting tools and other free resources - https://leosabo.com/resources
David’s website - www.stewardshippastors.com