Tips to Help you Protect (and increase) Your Retirement Income

July 28, 2015


When planning financially for retirement at any age, it must be considered, “How can I guarantee that my hard-earned, retirement assets will be there for me if an event occurs that causes a cash emergency or crisis?”  We can’t see everything on the horizon that is potentially a financial threat, but we can be prepared.

Are you prepared?  Most of us have insurance for automobiles, homes, boats, even jewelry; as well as health coverage for ourselves and our families.  We have policies for cancer, disability, long-term care, teeth, vision and on and on.

But many overlook the value of insuring their retirement, and most don’t really realize what a valuable role LIFE INSURANCE plays across ALL stages of an individual’s life.


Life Insurance is truly at the center of any sound financial plan for retirement.  If you don’t have a retirement plan, then there is no better time than the present.  Life insurance is the basic, tried-and-true financial solution to avert life’s risks because it provides security for your loved ones, and the ability to build up cash value.  In retirement, it can be used a tax-free source of income while you are alive.

How much life insurance does one need?  A simple formula is to carry a life insurance policy with a death benefit equal to the amount of your retirement assets.  Another approach is to determine how much income you would like to receive from the policy at some point in the future, and then design your plan around these goals.

Is there really a more important financial consideration than your retirement assets?  Isn’t the desire to retire the ultimate reason we work?  Yes, we work to put bread on the table and clothes on our backs, but also so that someday we will eventually be able to stop working.

If the protection of your retirement assets is at the top of your list of priorities, then a life insurance policy may be worth a look.  Contact L & A Services for custom retirement solutions that will give you peace of mind.


Annuities – Longevity Insurance

April 8, 2015


Annuities are taking a prominent role in the retirement income planning process, and part of the reason is protection against longevity risk (the risk of outliving your savings), according to article by contributor Jamie Hopkins.

Stocks, bonds, CDs and real estate CANNOT take longevity risk off the table.  Only some form of a lifetime income guarantee arrangement can – Social Security, a pension, or a lifetime income annuity.

In 2014, annuity sales in U.S. reached nearly $230 billion, representing a 3.8% increase over 2013 and a nearly 8% increase over 2012.

Insurance companies have enhanced their annuity offerings to include a wider range of benefits and features for consumers, since certain types of annuities are only suitable for certain situations.  Examples include bonus interest, increasing income (inflation protection), enhanced death benefits, and long term care benefits.

One particular type of annuity, often referred to as a “deferred income annuity”, or longevity insurance is the one product that has seen the fastest growth – from $211Million in 2011 to $2.7Billion in 2014!

Retirees with more sources of guaranteed income are happier, according to research. They are less concerned about finances when they know they have guaranteed income sources they know they simply cannot outlive.

With longevity insurance finally available in IRA’s and qualified retirement plans, where many people have most of their investable retirement assets, this tool should be considered when a lifetime retirement income is desired.

Retirement is personal.  Planning for it requires a licensed professional to review your goals and help you find the products that meet your needs best, based on your particular situation.  LNA Services can provide you with a no cost review, and more detailed information about annuity products that may help you meet  your retirement goals.

How NOT to Outlive Your Money in Retirement

January 30, 2013

Everyone has his or her own idea of what retirement looks like.  This is typically a vision of an ideal scenario.  Sadly, many fail to plan for the unexpected events and costs that can have a lasting impact on the retirement we imagined.

Furthermore, many underestimate the costs associated with retirement, especially those we have not control over:  Taxes, inflation, home & car repairs, and [especially] medical care, to name a few.  What if I end up living to age 110?  What is the cost of living going to be at that time, and do I have enough to guarantee I can afford to live that long?

There is good news…if you are not 110 years old, you still have time to plan for it.  Dr. Shelby Smith recently wrote an article that describes it best, and what you can do to protect yourself.  I have included the article below for your enjoyment.  I hope this will open up discussions about YOUR plans for the future, and if this is important to you, please call me for assistance.

Benjamin Rosky, RHU

January 2013

The greatest fear of most retirees is the risk of longevity: outliving their money. The meltdown of retirement accounts, rising medical costs, uncertain entitlement programs and higher taxes have added to the risk. Facing 30 years of retirement living on past savings and Social Security benefits is a scary reality. What can be done?

To handle other unaffordable risks you buy insurance. The same companies that protect your home, life, health and auto can also protect you from the risk of longevity. The basic principle of all insurance that makes coverage affordable is “pooling of risks”. Since the greatest fear of retirement is outliving your money and your remaining life span is uncertain, the solution is to insure the unaffordable risk. Let’s see how this is done.

Insurance companies issue fixed annuities, which can be turned into guaranteed lifetime incomes. You can accumulate your retirement money in an annuity over time, or you can fund the annuity lump-sum. Fixed annuities are backed by the assets of the insurance company, guaranteed to give you a positive rate of return which is free of income taxes until the earnings are withdrawn, and offer you numerous other choices. At the date you select, you can turn your annuity into a lifetime of monthly checks you cannot outlive. The insurance company guarantees you a lifetime of income, regardless of how long you live. You can later change your mind, stop the income and take your money lump-sum. If you die prematurely, your heirs are paid the balance of your account.

Let’s look at a hypothetical example that most insurance companies offer. Let’s say you are age 57, have $350,000 in an IRA account and plan to retire at 65. Parenthetically, you can put money in an annuity at any age and can start immediately to take an income. You’ll get the following by moving your IRA money to an annuity: (1) a 10% premium bonus that boosts your income account to $385,000; (2) a guaranteed growth in your income account of at least 8% annually; (3) the right to start a monthly income at any time after 591/2; (4) an annual lifetime income equal to 5.5% times your income account value at age 65; (5) the right to withdraw your money lump-sum if you change your mind; (6) no taxes on the annuity earnings until you start withdrawals; (7) no fees or commissions except 0.40% annual premium taken from earnings for the lifetime income guarantee. At age 65 and retirement what can you expect?

At age 65 the income account will be at least $712,608 since you were guaranteed at least 8% annual growth on your initial annuity premium plus the 10% bonus. Your annual guaranteed lifetime income will be $39,193 (5.5% of your $712,608 income account balance). If you should die prematurely, your account balance, if any, will go to your beneficiaries. If you change your mind, have an emergency, find a better value or whatever you can take your remaining money lump-sum. There are no medical requirements or other hassles. You are now insured against the risk of longevity and cannot outlive your money.

Insurance companies charge for their services and make a profit; thus, retirees that die too soon will subsidize those that live too long. The same as those whose homes were not damaged subsidizes those whose homes were damaged. Your retirement objective of a guaranteed lifetime of income was insured at a reasonable cost by pooling your longevity risk with that of other retirees. Combine your guaranteed lifetime income with Social Security benefits, and you have a comfortable and safe retirement with very little planning. Ask your financial advisor today about a fixed annuity with a Guaranteed Lifetime Income Benefit Rider.

Shelby J. Smith, Ph.D.
January 2013