The Importance of Guaranteed Lifetime Income

The prospect can be terrifying:

Running out of money too soon is a possibility that’s on almost every retiree’s mind, these days.

Not many people have a traditional pension plan anymore. So rightly or wrongly, it’s up to individual retirees to handle their own 401k, 403b, IRAs, and private savings and make sure it lasts for a lifetime.

Spend too much, and you risk financial catastrophe. On the other hand, many retirees worry about spending too little and depriving themselves of the lifestyle they worked so hard to achieve.

Sure, Social Security benefits are great. But it’s almost never enough by itself to sustain most people through any kind of successful retirement. Nearly everyone needs more income, and they need to make it last for the rest of their lives.

That’s where guaranteed lifetime income comes in.

Think of it as a safety net that allows you to spend confidently, knowing that a portion of your retirement income is secure, no matter how long you live.

Whether you’re enjoying your retirement now or just starting to plan, understanding the importance of guaranteed income could be the key to unlocking a more comfortable, worry-free future.

The Challenge: How Do You Make Your Savings Last?

Traditional retirement planning often assumes you’ll withdraw a set percentage of your savings each year to cover expenses.

For many years, the stock answer was about 4 percent.

That is, investment advisors would estimate you could keep money in stocks, and withdraw 4 percent of your nest egg each year to live on, and have a 90% probability that you would not outlive your retirement nest egg.

They call it a “Monte Carlo analysis.” And if it sounds like investment advisors were gambling with your retirement security, you’d be right. If you’re among the 10% of people that are on the wrong side of that game of chance, the consequences are dire indeed. 

How GLI Works

Guaranteed lifetime income annuities provide a solution to this challenge.

Simply put, it is a predictable, steady stream of income that continues for as long as you live.

You just contribute a lump sum, called premium, from your nest egg. And in return, you’ll get a check of a specific amount, month after month, year after year, for as long as you live.

Guaranteed.

Guaranteed lifetime annuities remove chance from the equation.

No other financial product can make that guarantee in writing.

There are no fees or expense ratios to worry about. In its simplest form, you contribute premium, and the insurance company guarantees a specific amount of income, no matter how long you live.

It’s like having your very own traditional pension plan that you create yourself!

Here’s how guaranteed lifetime income benefits you in retirement:

1. Freedom to Spend Without Fear

Many retirees are afraid of spending too much early in retirement, fearing they will run out of money in their later years. This can lead to unnecessary frugality, stress, and missed opportunities.

With guaranteed lifetime income, you know that a portion of your retirement funds will always be there, no matter how long you live. This provides peace of mind and allows you to spend your money more confidently.

For example, if you know your essential expenses—like housing, utilities, food, and healthcare—are covered by guaranteed income, you can enjoy the rest of your savings without worrying about going broke.

2. Protection Against Longevity Risk

One of the biggest risks retirees face is longevity risk, which is the possibility of outliving your money. With life expectancy increasing, many retirees now live well into their 80s, 90s, and beyond. While a long life is a blessing, it also means your savings need to last longer.

Guaranteed lifetime income eliminates this worry. Whether you live to 70, 90, or even 100, you’ll continue receiving income as long as you’re alive. This removes the pressure of guessing how long your money needs to last and ensures you won’t be left empty-handed in your later years.

3. Stability in an Uncertain World

Markets go up and down, interest rates fluctuate, and economic conditions change. These uncertainties can make relying solely on investments for income a risky proposition. Guaranteed lifetime income provides a level of stability that investments alone cannot. It’s a reliable source of cash flow that won’t be affected by market volatility or economic downturns.

For seniors, this stability is especially important. It allows you to weather economic ups and downs without having to make drastic changes to your retirement plans or lifestyle.

4. Supplement to Social Security

While Social Security provides a foundation of guaranteed income for most retirees, it often isn’t enough to cover all expenses, especially as healthcare costs and inflation increase over time. By adding another source of guaranteed income, like an annuity, you can strengthen your financial foundation and ensure you’re better prepared for whatever the future holds.

Take the Next Step Toward Retirement Confidence

Guaranteed lifetime income can be a game-changer for your retirement.

At MediGap Advisors, we specialize in helping seniors create personalized retirement income strategies that include guaranteed lifetime income solutions.

If you’re interested in adding a guaranteed lifetime income component to your retirement portfolio, contact your MediGap Advisors Personal Benefits Manager today to schedule a free consultation.

Here’s to your health and wealth,

Wiley P. Long, III
President – MediGap Advisors

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