Tackling America’s Retirement Income Crisis with Protected Lifetime Income

Our Commitments

*Create awareness for the looming retirement income crisis in America and advance solutions for the 64% of American households (80 million) that are unprotected.

*Educate Americans on how to avoid the risks of outliving their savings, with protected lifetime income from an annuity.

*Shift the retirement planning mindset from focusing solely on accumulating savings to one that includes protected income.

*Create understanding for the critical role annuities play in a modern, comprehensive retirement portfolio.

Too many American households approach retirement without protected lifetime income other than Social Security.
We provide consumers and financial advisors with the educational resources, tools and insights they can use to include protected lifetime income in their retirement plans.

Get The Facts



IRA

An Individual Retirement Annuity (IRA) is used to accumulate funds for retirement.

Currently, there are personal contribution limits for a traditional IRA and no personal contributions can be made in the year the owner attains age 70½. Personal contributions to a traditional IRA may be income-tax-deductible to the owner depending upon their tax filing status, their adjusted gross income and whether the owner participates in other qualified retirement plans sponsored by their employer. Amounts distributed to the owner are taxable as ordinary income. Required minimum distributions must be made once the owner attains age 70½. A traditional IRA is different from a Roth IRA or a SIMPLE IRA. Rollovers are accepted without limits.



Roth IRA

A Roth individual retirement annuity (Roth IRA) is used to accumulate funds for retirement.

Currently, there are personal contribution limits for a Roth IRA and personal contributions may not be permitted if the owner’s adjusted gross income exceeds certain limits. Personal contributions to a Roth IRA are not income-tax deductible to the owner. A Roth IRA can also be funded by completing a Roth IRA conversion from an IRA or eligible retirement plan. A Roth IRA conversion results in a taxable event to the owner. If the qualified distribution requirements are satisfied, a distribution from a Roth IRA will be income tax free. There are no required minimum distributions (RMD) from a Roth IRA while the owner is living, but RMD rules apply for beneficiaries after the owner’s death. A Roth IRA is different from a traditional IRA, SEP IRA, or a SIMPLE IRA.



Simple IRA

A Simple IRA is a plan in which a small business with 100 or fewer employees can offer retirement benefits through employee salary reductions and employee non-elective or matching contributions.

To establish a SIMPLE IRA, the employer must complete a IRA form 5304-SIMPLE and distribute the completed form to the eligible employees. The employer will submit the employee salary reduction contribution and the matching contributions to the SIMPLE IRA contract established. Certain contribution limits exist for the salary reduction contributions, along with a catch up contribution that is permitted for employees age 50 or older. Amounts distributed to the owner are taxable as ordinary income. Required minimum distributions must be made once the owner attains age 70½. We permit SIMPLE IRAs to be funded with fixed annuities, but not variable annuities.



401K

The solo 401(k) is a retirement plan, which can be used for a business with no employees other than the business owner and spouse.

You must have no expectations of having other employees to consider this plan. A solo 401(k) plan is known by many names, including self-employed 401(k) plan and individual 401(k) plan, but is a 401(k) plan that has only one participant, the self-employed business owner, or two participants if owner and spouse. As soon as this type of plan adds a participant other than an owner and spouse, it becomes a 401(k) plan. As long as the self-employed owner and spouse are the only employees required to be covered by the plan, the plan avoids the nondiscrimination testing and certain other rules applicable to 401(k) plans.



Will You Run Out of Money in Retirement?

One of your main concerns when planning retirement is to ensure your money lasts throughout your life.

After all, you worked hard and saved your entire life – you shouldn’t have to worry about reducing your lifestyle.

Making sure your retirement is properly funded is more challenging than ever before given the number of risks and concerns you’ll face. Risks like market volatility and economic uncertainty. On top of that, we’re living longer than we used to. The steady income for life provided by company pension plans -- if you were lucky enough to have one – countered some of those risks, but pensions are disappearing from the American landscape. Today, only 18 percent of American workers have access to a defined-benefit pension plan, according to a Bureau of Labor Statistics survey in 2016.

Even with all of the risks and concerns a person has as they face retirement, there is some good news: You can replace that kind of protected monthly income by investing in an annuity.

“Put simply, an annuity is the only financial product that can generate income that will last as long as someone may live, whether that is to age 80, 90, 100 or 110,” explains Frank O’Connor, vice president of research and outreach at the Insured Retirement Institute.

Annuities are long-term investments offered by insurance companies, that can provide this lifetime guarantee because they’re able to pool the risk among a wide range of individuals.

Putting a portion of your retirement savings into the protected monthly income you receive from an annuity also helps avoid a second issue with working with lump-sum investments, says William G. Gale, the Arjay and Frances Miller Chair in Federal Economic Policy and director of the Retirement Security Project at the Brookings Institution think tank in Washington, D.C.

If you draw down your lump sum savings too aggressively, and live longer than you expected, you might have to rely on less in your later years, he says. But, conversely, if you draw down your savings too conservatively and pass away earlier than you expected, you could end having less and not enjoying your retirement years as much as you could have.

Having some portion of your retirement assets in an annuity lessens these two risks, Gale says. You can have a standard of living that’s higher than in the conservative draw-down case and be assured that protected lifetime income will last as long as you do. O’Connor believes that the temptation to overspend is greater when you see your savings as a lump sum. “Retirement savings will seem like financial windfall at first,” he says, “but using that ‘pot of gold’ without a plan creates a high probability of exhausting those savings while you still need them.”

Annuities can also protect you from outliving your income in retirement by decreasing your need to make financial decisions late in life. “We’re all vulnerable to the challenges of old age,” says Jack Dolan, vice president of the American Council of Life Insurers.

Remember – not all annuities are alike. For example, some annuities provide a family benefit, beyond one person’s life, whether a joint benefit or a death benefit. Your need for an annuity will also depend on your other sources of retirement income, such as Social Security, required minimum distributions from retirement plans and other sources of regular income. So confer with a financial adviser before investing in an annuity.

Whatever your asset mix is, all retirement planning comes down to one thing: feeling more secure. And having the protected lifetime income an annuity provides can help you focus less on concerns such as health-care costs in the future and more on enjoying your golden years to the fullest.

Annuities in Action

James Moskito decided to retire some of his risk in retirement by implementing lifetime income solutions. Read his full story below to see how this oceanographer applied an annuity to existing retirement portfolio.

Download Reference PDF HERE

How an annuity works

You may not be familiar with annuities, but they have a rich history dating back to Ancient Rome.

In fact, millions of Americans currently use annuities to help their retirement savings grow and to create protected income that can help cover essential expenses and contribute to a more enjoyable retirement.

In its simplest terms, an annuity is a contract between an individual (or married couple) and a life insurance company. You can purchase an annuity with a portion of your retirement savings in either a single payment or with multiple payments, depending on the type of annuity. Once you own an annuity, any growth in your account may be on a tax-deferred basis while you continue to have control of your money, as needed.

Annuities can be an important part of a diversified retirement portfolio because they can ensure that your retirement income is protected even when there are downturns in the market. So no matter how your other retirement investments perform, annuities can provide you with a source of protected lifetime income that few other financial products can offer.

"Certain types of annuities offer you the flexibility to receive protected lifetime income while maintaining access to your money."

When you’re ready to take income, you may receive payments in a variety of ways depending on your needs and the type of annuity you purchased. You can choose to receive income immediately, or at a later date. Payments can be in lump sums of your choosing, in a series of payments for a specified period of time or you may choose to receive guaranteed payments for as long as you live. Certain types of annuities offer you the flexibility to receive protected lifetime income while maintaining access to your money.

One of the key advantages of annuities is that they are offered by life insurance companies and can offer protection and guarantees not generally found in other products. Depending on the type of annuity and the options you choose, you can get a guaranteed rate of return for your retirement money, protect your nest egg and income from drops in the market, secure a death benefit for your loved ones and, of course, have protected lifetime income for you. It’s important to remember that these guarantees are dependent upon the financial strength of the insurance company, so be sure to talk with your financial advisor.

Annuities have been a reliable and trusted option for centuries. During the Great Depression, annuities saw a spike in popularity as stock market volatility threatened retirement savings and Americans were looking to protect their assets with more conservative financial products.

Today, with fewer people covered by traditional pension plans, annuities can fill a critical gap in retirement portfolios by providing a guaranteed monthly check for as long as you live, no matter how the markets perform.

“Annuities are long-term financial products designed for retirement purposes. Early withdrawals may be subject to withdrawal charges. Partial withdrawals may reduce benefits available under the contract. Withdrawals of taxable amounts are subject to ordinary income tax and, if taken prior to age 59½, an additional 10% federal tax may apply. Optional income protection features are subject to additional fees, requirements and other limitations. Keep in mind, for retirement plans and accounts (such as IRAs and 401(k)s), an annuity provides no additional tax-deferred benefit beyond that provided by the retirement plan or account itself. Contract and optional benefit guarantees are backed by the financial strength of the issuing insurer.”

Annuities Explained

Annuities are flexible products and, depending on the type, can meet needs for protected lifetime income, growth and downside protection. Learn how they can help meet your needs with this simple reference PDF

Download Reference PDF HERE

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